Section 93: Relinquishment upon Renewal or Conversion of an Oil Mining Lease.

1 A holder of oil mining lease, including oil mining lease that is subject to production sharing contract, shall at the renewal date applicable to the oil mining lease or at the conversion date, designate each area and zone of the oil mining lease as areas and zones—
a which, in the opinion of the holder, merit appraisal and for which the holder of the oil mining lease is prepared to present an appraisal program under section 78 of this Act;
b in respect of which the holder is prepared to make a declaration of a commercial discovery under section 78 of this Act and submit a field development plan to the Commission under section 79 of this Act;
c in respect of which the holder is prepared to make a declaration of a significant gas discovery or a significant crude oil discovery under section 78 of this Act and submit an application for approval of a retention area;
d in respect of which development of a field is underway based on prior approvals after having declared the discovery commercial or if no such declaration was made after having made a final investment decision to develop the field; and
e in respect of which regular commercial production is occurring.

2 Where the total acreage selected under subsection (1) is less than 40% of the area to which the applicable oil mining lease applies, the holder may select additional areas covered by the oil mining lease for conversion to a petroleum prospecting licence in such a manner that the total of all areas selected shall not be more than 40% of the oil mining lease area and where the total acreage selected under subsection (1) is more than 40%, the holder shall be entitled to keep such larger area, consisting solely of the selected areas.

3 Any selected area under subsection (2) shall be based on parcels.

4 Areas and zones subject to an oil mining lease and not selected by the holder under subsections (1) and (2) shall be relinquished by the holder.

5 The relinquishment date for the purpose of subsection (4) shall be the renewal date or where the holder of the oil mining lease decides to convert under section 92 (1) of this Act, the conversion date.

6 Subject to section 94 of this Act on the applicable relinquishment date, the Commission shall convert the applicable oil mining lease in respect of each area and zone—
a designated by a holder under subsection (1) (a), (b), (c) or (2) into a petroleum prospecting licence in accordance with section 78 of this Act, with fiscal terms as applicable under section 267 (b) and other terms of Chapter 4 of this Act for new acreage and with the relinquishment date being the effective date for such petroleum prospecting licence; and
b selected under subsection (1) (d) and (e), into petroleum mining leases, with fiscal terms as applicable under section 267 (a) and other terms of Chapter 4 of this Act to the lease, provided that, for—
(i) production sharing contracts for the determination of the profit oil sliding scale based on cumulative production, the total production from all petroleum mining leases shall be applicable, and
(ii) royalty purpose, the production of each petroleum mining lease shall be the basis.

7 Where a licensee of an oil prospecting licence, including any oil prospecting licence that is subject to a production sharing contract, voluntarily opts to convert its licence to a petroleum prospecting licence under section 92 of this Act, it shall select as provided in subsection (1) the areas and zones indicated in this subsection upon the conversion date and the Commission shall convert the applicable oil prospecting licence of the areas and zones—
a designated by a holder under section 93 (1) (a), (b) and (c) of this Act as areas to be continued under the petroleum prospecting licence under this Act, with fiscal terms as applicable under section 267 (b) and other terms under Chapter 4 of this Act for new acreage;
b selected under section 93 (1) (d) and (e) of this Act shall be converted into petroleum mining leases with fiscal terms as applicable under section 267 (a) and other terms of Chapter 4 of this Act, applicable to these leases, provided that—
(i) with respect to production sharing contracts for the determination of the profit oii sliding scale based on cumulative production, the total production from all petroleum mining leases shall be applicable, and
(ii) for royalty purposes, the production of each petroleum mining lease shall be the basis; and
c the remaining area shall continue as exploration area under the petroleum prospecting licence, with fiscal terms as applicable under Chapter 4 of this Act for new acreage.

8 With respect to existing oil mining leases where NNPC held vested rights to natural gas prior to the effective date of the Act, under a conversion pursuant to subsection (6) (a) and (b), NNPC Limited shall retain these rights and where NNPC Limited relinquishes such rights, the conversion contract under section 92 (1) of this Act, shall include a consideration to NNPC Limited for the market value of the rights relinquished.