Downstream: Nigerian Government moves to revoke unutilised licences, withdraw dormant oil blocks

*Senator Heineken Lokpobiri, Minister of State for Petroleum Resources (Oil), affirms the Federal Government will implement the ‘drill or drop’ provisions of the Petroleum Industry Act to boost oil production in the West African country

Gbenga Kayode | ConsumerConnect

The Federal Government of Nigeria has said it is set to revoke the Oil Prospecting Licences (OPLs) for, and withdraw oil blocks from the allottees that have failed to develop them ever since they were awarded in the downstream petroleum sector of the economy.

Senator Heineken Lokpobiri, Honourable Minister of State for Petroleum Resources (Oil), who stated this Tuesday, April 1, 2025, affirmed the government would begin implementing the “drill or drop” provisions of the Petroleum Industry Act (PIA) in line with the drive to boost oil production in the West African country.

ConsumerConnect reports an oil prospecting licence, or Petroleum Prospecting Licence (PPL), is a licence awarded by the Minister for Petroleum Resources, under Section 72 of the Petroleum Industry Act, 2021.

According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and subject to the conditions imposed on the Licence by the Minister, the licence confers the following rights to the holder: Exclusive right to drill exploration and appraisal well in the country.

The PPL also grants a company the right to explore and prospect for petroleum resources within a specific area, including the right to drill exploration and appraisal wells, and potentially extract and dispose of any commercially viable petroleum found.

Nneamaka Okafor, Media Aide to Minister, in a statement, said Senator Lokpobiri noted this at a Cross Industry Group meeting the IOCs operating in Nigeria held in Florence, Italy.

The development has come in view of the Federal Government’s production target of 2.06 million barrels per day (bpd) for this fiscal year.

The Nigerian Upstream Petroleum Regulatory Commission reportedly, estimated the country’s oil production at 1.67 million barrels per day (bpd), as of February 2025.

The statement also disclosed the stakeholders’ meeting focused on challenges, expectations, and strategies to enhance the sector’s contributions to domestic energy needs and regional expansion across Sub-Saharan Africa.

Lokpobiri also stated: “We cannot continue to have assets sitting idle for 20 to 30 years without development.

“If you are not utilising an asset and it remains underdeveloped for decades, it neither adds value to your books nor to us as a country.”

The Minister stated: “We encourage industry players to explore collaborative measures such as shared resources for contiguous assets, farm-outs, and the release of underutilised assets to operators ready to invest in production.

“Otherwise, like any responsible government, we will take back these assets and allocate them to those willing to go to work.”

He further urged oil sector operators to consider farm-out agreements where assets are close to existing infrastructure, rather than incurring high costs on new Floating Production Storage and Offloading (FPSO) units.

Lokpobiri urged International Oil Companies (IOCs), in Nigeria to ramp up investments in the oil and gas industry.

The Minister as well noted President Bola Ahmed Tinubu’s administration has provided every necessary incentive to ensure seamless and profitable operations in the downstream petroleum sector.

As IOCs have pointed to Engineering, Procurement, and Construction (EPC) contractors as a challenge, EPCs will only commit when they see strong investment decisions from industry players, said the Minister.

He averred: “The government has done its part by providing the requisite and investment-friendly fiscal policies, including the President’s Executive Order incentivising deepwater investments.

“Now, the ball is in the court of the IOCs and other operators to make strategic investment decisions that will drive increased production and sustainability in the sector.”

He also stressed the need for IOCs to support local refining efforts at enhancing refined products available in Nigeria.

According to him, more refineries are coming on stream, and will require a steady supply of crude oil.

Lokpobiri said in order to make this easy and possible, ramping up production would enable Nigeria to meet both local and international obligations.

Responding, Mr. Osagie Osunbor, Chairman of the Oil Producers Trade Section (OPTS), commended the Minister for his direct engagement with industry players, and Federal Government’s continued efforts at improving the sector.

Osunbor said: “We appreciate the government’s commitment to creating a conducive environment for investment.

“The Minister’s engagement has provided critical insights and has also challenged us as industry players to step up efforts to increase production.”