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The Production Handling Agreement is essential in the Nigerian oil and gas industry where shared infrastructure and optimization of facility usage are crucial for efficient operations. This document is typically used when one company needs to process its hydrocarbon production through facilities owned by another company, often due to economic efficiency, infrastructure limitations, or regulatory requirements. The agreement must comply with Nigerian petroleum laws, particularly the Petroleum Industry Act 2021, and includes detailed technical, operational, and commercial provisions. It addresses key aspects such as capacity allocation, processing specifications, tariffs, measurement procedures, and operational standards. The document also incorporates specific Nigerian requirements regarding local content, environmental compliance, and regulatory approvals, making it a crucial tool for facility sharing arrangements in Nigeria's oil and gas sector.

1. Parties: Identification of the Facility Owner and the Customer, including their registered addresses and company details

2. Background: Context of the agreement, including reference to the relevant facilities, licenses, and regulatory approvals

3. Definitions and Interpretation: Detailed definitions of technical and legal terms used throughout the agreement

4. Scope of Services: Detailed description of production handling services to be provided, including processing, storage, and delivery

5. Term and Termination: Duration of the agreement, conditions for renewal, and circumstances for termination

6. Delivery Points and Title: Specification of intake and delivery points, transfer of title and risk

7. Capacity Allocation and Nominations: Rules for capacity booking, nomination procedures, and capacity optimization

8. Technical Requirements: Specifications for hydrocarbons, operating parameters, and technical standards

9. Operating Procedures: Day-to-day operational procedures, maintenance, and HSE requirements

10. Tariff and Payment Terms: Fee structure, invoicing, and payment procedures

11. Measurement and Testing: Procedures for measuring quantity and quality of hydrocarbons

12. Liability and Indemnification: Allocation of risks and responsibilities between parties

13. Force Majeure: Definition and consequences of force majeure events

14. Confidentiality: Protection of confidential information and trade secrets

15. Governing Law and Dispute Resolution: Choice of Nigerian law and dispute resolution mechanisms

16. Boilerplate Provisions: Standard legal provisions including notices, assignments, and amendments