The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has threatened to revoke non-performing Petroleum Prospecting Licences (PPLs) awarded under the 2020 Marginal Field Bid Round, the 2022/2023 Mini Bid Round and the 2024 Licensing Round.
The commission said affected licence holders must fulfil their statutory work commitments or risk losing their assets under the “Drill-or-Drop” provisions of the Petroleum Industry Act (PIA) 2021.
The warning was contained in a circular signed by the Commission Chief Executive, Mrs. Oritsemeyiwa Eyesan, and addressed to holders of PPLs awarded under the three licensing exercises.
The NUPRC/1127/VOL.13/55, was issued as part of the commission’s efforts to increase Nigeria’s oil and gas production and prevent petroleum assets from remaining undeveloped.
NUPRC reminded the licensees that their licences have finite terms and that they are required to execute their approved work programmes within the timelines prescribed by law and the terms of their licence agreements.
The commission’s position is based on Section 94 of the PIA, which requires holders of petroleum prospecting licences to commence work on their assets or relinquish them. The provision is commonly known as the “Drill-or-
Under the policy, companies that fail to conduct meaningful exploration, appraisal or development activities could face sanctions, including the cancellation or revocation of their licences.
The affected operators may also be required to demonstrate evidence of compliance with their approved work programmes, including exploration activities, drilling commitments, technical studies, regulatory payments and other obligations attached to their licences.
The NUPRC has increasingly warned against the practice of holding oil assets without developing them. It has said that the era of dormant licences is over and that companies without the technical and financial capacity to develop their assets would be required to relinquish them.
The threatened enforcement could result in the recovery and reallocation of non-performing oil blocks to more capable investors. It is also expected to accelerate exploration, boost crude oil and gas production, attract fresh investment and increase government revenue from the upstream petroleum sector.
The commission has separately urged new licence holders under the 2022/2023 Mini Bid Round and the 2024 Licensing Round to move quickly from licence acquisition to actual field development.
However, the circular does not necessarily mean that all licences covered by the three licensing exercises have been revoked. Rather, it serves as a compliance notice and warning to operators that have failed, or are at risk of failing, to meet their approved obligations.
Licensees that are unable to provide satisfactory evidence of progress may ultimately lose their assets in line with the provisions of the Petroleum Industry Act and relevant upstream petroleum regulations.
