Oil and Gas Service Agreement (Nigeria)
OIL AND GAS SERVICE AGREEMENT
Nigerian Oil and Gas Industry Content Development Act 2010 | Petroleum Industry Act 2021 | Nigerian common law
THIS OIL AND GAS SERVICE AGREEMENT is made on [Effective Date]
BETWEEN:
(1) [Operator Name] (CAC: [Operator CAC]), of [Operator Address] — the OPERATOR; and
(2) [Contractor Name] (CAC: [Contractor CAC]), of [Contractor Address] — the CONTRACTOR.
1. SCOPE OF SERVICES
1.1 The Contractor shall provide the following services: [Scope of Work]
1.2 The services shall be performed at or in connection with [Work Location].
1.3 This Agreement shall commence on [Effective Date] and shall continue for [Contract Duration], subject to earlier termination in accordance with the provisions of this Agreement.
2. SERVICE FEES AND PAYMENT
2.1 The fee structure under this Agreement is: [Fee Structure]. The applicable rate or fee is: [Fee Amount].
2.2 The Contractor shall submit invoices to the Operator at agreed intervals. Payment terms: [Payment Terms] days from the date of a valid invoice. Late payments shall bear interest at the Central Bank of Nigeria Monetary Policy Rate plus 5% per annum from the due date.
2.3 All invoices shall be subject to verification and audit by the Operator. Disputed amounts shall be subject to the dispute resolution provisions of this Agreement.
3. HSE OBLIGATIONS
3.1 The Contractor shall comply with the Operator's Health, Safety and Environment (HSE) Management System, the Petroleum Industry Act 2021 Part VI, and NUPRC and NMDPRA operating regulations and permit conditions applicable to the work location.
3.2 The Contractor shall maintain valid employers' liability insurance covering all personnel under the Employees' Compensation Act 2010 (administered by NSITF), third-party liability insurance, and for marine operations, P&I Club cover. All insurers must be licensed by NAICOM under the Insurance Act 2003.
3.3 The Contractor shall maintain HSE incident records and provide HSE statistics to the Operator on request.
4. MUTUAL HOLD HARMLESS
4.1 Each party (the 'Indemnifying Party') shall indemnify, defend, and hold harmless the other party and its Group (the 'Indemnified Party') from and against all claims, losses, and liabilities arising from: (a) personal injury to or death of the Indemnifying Party's Group personnel; and (b) damage to or loss of the Indemnifying Party's Group property — regardless of the negligence or fault of the Indemnified Party.
4.2 The mutual hold harmless principle shall not apply to claims arising from gross negligence or wilful misconduct of the Indemnified Party.
5. NIGERIAN CONTENT
5.1 The Contractor shall comply with the Nigerian Oil and Gas Industry Content Development Act 2010 (Local Content Act) and all NCDMB regulations. The Contractor's Nigerian Content commitments: [Nigerian Content Commitment]
5.2 The Contractor shall submit a Nigerian Content Plan to the NCDMB before commencement of services and shall permit the Operator and NCDMB to audit Nigerian Content compliance at any time during the contract period.
6. GOVERNING LAW AND DISPUTE RESOLUTION
6.1 This Agreement is governed by [Governing Law]. Any dispute arising out of or in connection with this Agreement shall be referred to arbitration under the rules of [Arbitration Forum], with the seat of arbitration in Lagos, Nigeria.
IN WITNESS WHEREOF the parties have executed this Agreement on [Effective Date].
Operator — Authorised Signatory
________________
Signature
Contractor — Authorised Signatory
________________
Signature
What Is a Oil and Gas Service Agreement (Nigeria)?
An Oil and Gas Service Agreement in Nigeria sets out the terms on which a service provider performs work and is paid by the client.
The Nigerian Oil and Gas Industry Content Development Act 2010 (Local Content Act) has profoundly shaped oil and gas service contracting in Nigeria. Section 3 of the Local Content Act establishes the general principle that Nigerian companies shall be given first consideration in the award of contracts in the Nigerian oil and gas industry. Section 10 of the Local Content Act requires operators to give preferential treatment to Nigerian contractors for defined service categories before engaging foreign contractors, and Section 11 requires that a minimum percentage of services be sourced from Nigerian-owned companies. The Nigerian Content Development and Monitoring Board (NCDMB) monitors compliance and may investigate contracts that appear to circumvent Nigerian Content requirements.
The mutual hold harmless (MHH) principle — sometimes called the knock-for-knock indemnity — is a standard feature of Nigerian petroleum industry service agreements. Under MHH, each party assumes responsibility for personal injury to or death of its own personnel and damage to or loss of its own property, regardless of the negligence or fault of the other party. The party responsible for its own personnel and property is said to 'hold harmless' the other party in respect of claims by those personnel or in respect of that property. MHH clauses in Nigerian oilfield contracts have been upheld by the Nigerian courts as a valid contractual allocation of risk, reflecting international petroleum industry practice.
The Nigerian petroleum service contracting market is regulated by several sector-specific bodies. The NCDMB under the Local Content Act monitors Nigerian Content compliance in service contracts. The Department of Petroleum Resources (DPR) — now replaced by the NUPRC for upstream and NMDPRA for midstream/downstream under the PIA 2021 — previously maintained a register of approved oil and gas service contractors. The Standards Organisation of Nigeria (SON) and the Federal Ministry of Environment apply product and environmental standards to equipment and materials used in petroleum operations.
The legal framework governing the Oil and Gas Service Agreement (Nigeria) in Nigeria draws on several key statutes and regulatory bodies. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Parties executing a Oil and Gas Service Agreement (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies and Allied Matters Act (CAMA) 2020 sets the foundational requirements.
When Do You Need a Oil and Gas Service Agreement (Nigeria)?
An Oil and Gas Service Agreement in Nigeria is required in the following circumstances.
An Oil and Gas Service Agreement is needed when an operator holding a petroleum licence under the PIA 2021 engages a drilling contractor — such as a provider of jack-up rigs, semi-submersible rigs, or land drilling rigs — to drill exploration, appraisal, or development wells on a day-rate or turnkey basis.
An Oil and Gas Service Agreement is required when a pipeline construction company is contracted to design, procure, and install onshore or offshore pipelines, flow lines, or gathering systems for an oil or gas field development, on EPC (Engineering, Procurement and Construction) or EPCM terms.
An Oil and Gas Service Agreement is needed when a seismic acquisition company — such as a company providing 2D, 3D, or 4D seismic surveys on behalf of the operator — is engaged to acquire and process geophysical data over a licence area, with the resulting data owned by the operator.
An Oil and Gas Service Agreement is required when a well services company (providing cementing, perforating, wireline logging, completion, or workover services) is contracted to support the operator's drilling and well operations programme.
An Oil and Gas Service Agreement is needed when an indigenous Nigerian oil and gas service company — qualifying for preferential treatment under Section 3 of the Local Content Act 2010 — is contracted to provide facilities management, brownfield maintenance, inspection, or integrity management services for an onshore or offshore production facility.
Parties in Nigeria should prepare a Oil and Gas Service Agreement (Nigeria) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Oil and Gas Service Agreement (Nigeria)
A valid Nigeria Oil and Gas Service Agreement must contain the following essential elements.
Parties: Full legal names, CAC registration numbers under CAMA 2020, and registered addresses of the operator (or principal) and the service contractor. For foreign-incorporated service contractors, the Nigerian subsidiary's CAC details should be stated to confirm Nigerian Content compliance.
Scope of Work: A precise, technical description of the services to be provided — referenced to a technical specification, scope of work document, or work order attached as a schedule. Ambiguity in the scope of work is a primary source of disputes in Nigerian oilfield contracts; the scope should define deliverables, work locations (onshore/offshore/deepwater), mobilisation requirements, and exclusions.
Service Fees and Payment: The fee structure (day rate, lump sum, unit rate, or cost-reimbursable with a fee) stated in USD or NGN; invoicing procedures; payment terms (typically 30 to 45 days from invoice receipt); and provisions for disputed invoices. For USD-denominated contracts, the applicable exchange rate mechanism for NGN payment must be specified.
HSE Obligations: The contractor's obligations to comply with the operator's HSE management system, the PIA 2021 Part VI environmental and safety provisions, NUPRC or NMDPRA operating regulations, and the operator's permit-to-work (PTW) system. The contractor must demonstrate valid third-party liability insurance, employer's liability insurance, and (for marine operations) P&I Club cover.
Mutual Hold Harmless (MHH): Express indemnity provisions under which each party bears responsibility for injury to or death of its own Group personnel and damage to its own Group property, regardless of the other party's negligence — subject to agreed exceptions for gross negligence and wilful misconduct.
Nigerian Content: The contractor's commitments to comply with the Local Content Act 2010 and NCDMB regulations, including the minimum percentage of Nigerian personnel employed, goods and materials sourced from Nigerian suppliers, and services sub-contracted to Nigerian-owned companies.
Dispute Resolution and Governing Law: Nigerian law as governing law; dispute resolution by arbitration (typically at the Lagos Court of Arbitration or ICC Nigeria) or by expert determination for technical disputes.
Additional compliance elements for a Oil and Gas Service Agreement (Nigeria) used in Nigeria include: Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Forms-legal.com provides this template as a starting point for Nigeria-compliant documentation.
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Forms Legal. (2026). Oil and Gas Service Agreement (Nigeria) (Nigeria) [Legal document template]. Forms Legal. https://forms-legal.com/nigeria/business/contracts/oil-gas-service-agreement-nigeria
"Oil and Gas Service Agreement (Nigeria) (Nigeria)." Forms Legal, 2026, https://forms-legal.com/nigeria/business/contracts/oil-gas-service-agreement-nigeria.
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year = {2026},
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note = {Free legal document template. Based on Companies and Allied Matters Act (CAMA) 2020}
}Frequently Asked Questions
The mutual hold harmless (MHH) principle — also called the knock-for-knock indemnity — is a standard contractual risk allocation mechanism in Nigerian petroleum industry service agreements. Under MHH, each contracting party agrees to be responsible for, and to indemnify the other party against, all claims arising from personal injury to or death of its own employees, agents, and subcontractors, and all claims arising from damage to or loss of its own property — regardless of the negligence or fault of either party. The MHH principle means that if an operator's employee is injured on a contractor's work site, the operator bears the liability for that injury; if a contractor's employee is injured on the same site, the contractor bears the liability. This allocation of risk by group membership (as opposed to fault) provides commercial certainty and prevents expensive cross-claims in the event of incidents. Nigerian courts have upheld MHH clauses in oilfield contracts as valid contractual risk allocations, provided they are clearly drafted and do not exclude liability for gross negligence or wilful misconduct, which are typically carved out.
Under the Nigerian Oil and Gas Industry Content Development Act 2010 (Local Content Act) and the NCDMB Nigerian Content Regulations, oil and gas service contractors operating in Nigeria must comply with the following key Nigerian Content obligations. First, employment: service contractors must prioritise the employment of qualified Nigerians at all levels, with a minimum of 90% Nigerian employees at junior and intermediate levels and progressively increasing targets at senior and management levels. Second, supply chain: service contractors must give first consideration to Nigerian-owned companies (companies where Nigerians hold 51% or more equity) when sub-contracting services and procuring materials. Third, technology transfer: contractors must submit Nigerian Content plans demonstrating how they will build local capacity and transfer technology and skills to Nigerian employees and companies. Fourth, fabrication: where a Nigerian-based fabrication facility with adequate capacity exists, that facility must be used for structural and equipment fabrication. The NCDMB monitors compliance and may disqualify non-compliant contractors from future contract bids.
Yes. An Oil and Gas Service Agreement in Nigeria is an agreement relating to services rendered in Nigeria and is subject to stamp duty under the Stamp Duties Act (Cap S8, Laws of the Federation of Nigeria 2004). For agreements between companies (or between a company and an individual), the Federal Inland Revenue Service (FIRS) has jurisdiction to assess and collect stamp duty following the Finance Act 2020's clarification of jurisdictional boundaries. The applicable stamp duty rate depends on the nature of the agreement: service contracts attracting ad valorem duty are assessed at the prescribed percentage of the contract value; others attract a fixed duty. The Finance Act 2021 introduced a 0.5% stamp duty on electronic receipts for transactions exceeding NGN 10,000, which affects invoice receipts under service agreements. An unstamped service agreement is inadmissible in evidence in Nigerian court proceedings under Section 22 of the Stamp Duties Act. Parties should ensure their service agreements are duly stamped before or promptly after execution.
Under Nigerian law, a foreign company wishing to carry on business in Nigeria — including providing oilfield services — must incorporate a subsidiary company in Nigeria with the Corporate Affairs Commission (CAC) under the Companies and Allied Matters Act 2020 (CAMA 2020) and obtain an NIPC Investment Certificate under the NIPC Act 1995. Section 78 of CAMA 2020 prohibits foreign companies from carrying on business in Nigeria without incorporation of a Nigerian company. Additionally, the Local Content Act 2010 requires that oil and gas services are provided through Nigerian-registered entities with demonstrable Nigerian Content. A foreign company may also be required to obtain specific professional or technical licences (such as NUPRC/NMDPRA contractor registration) before providing regulated petroleum services. The NCDMB enforces Local Content compliance and operators who award contracts to non-compliant foreign companies risk losing their own Nigerian Content compliance rating, which affects future licence renewals and government contract eligibility.
Nigerian oil and gas service agreements typically provide for arbitration as the primary dispute resolution mechanism, rather than litigation in the Nigerian courts, reflecting the international nature of petroleum industry contracting and the desire for neutral, expert, and confidential resolution of technical and commercial disputes. The Lagos Court of Arbitration (LCA) — established under the Lagos Court of Arbitration Law 2009 and recognised as a centre for international commercial arbitration — is commonly specified for disputes between Nigerian counterparties. The ICC International Court of Arbitration in Paris (or its Nigerian seat) is preferred for contracts between Nigerian operators and large international service contractors. The Nigerian Arbitration and Mediation Act 2023 (which replaced the Arbitration and Conciliation Act 1990) modernised the legal framework for arbitration in Nigeria, incorporating provisions from the UNCITRAL Model Law on International Commercial Arbitration. Many oil and gas service agreements also include an expert determination clause for technical disputes (such as disagreements about measurement or specifications) that can be resolved faster and more cheaply than full arbitration.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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