FG says oil firms must drill or drop undeveloped assets

The federal government has declared an end to companies holding oil and gas licences without developing them, saying operators must either invest in production or give up the assets under the drill-or-drop rule in the Petroleum Industry Act (PIA).

Minister of State for Petroleum Resources (Oil) Heineken Lokpobiri said the law gives the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) power to recover undeveloped assets and hand them to investors ready to develop them.

“The era of holding assets as souvenirs or symbols of wealth is gone: you either drill or drop,” Lokpobiri said in an interview published in Upstream Gaze, a NUPRC magazine marking its fifth anniversary.

He said some operators are now giving up assets voluntarily rather than wait for the regulator to take them, while others are reviewing their portfolios.

What it means for Nigerians

The policy is meant to stop speculative ownership of oil blocks and push more blocks into actual production. That matters for government revenue, which funds budgets at a time when Nigerians are contending with high prices, and for the country’s output targets.

Lokpobiri said 50 assets were recently put up for bidding, with another licensing round expected. He also said active drilling rigs have risen from between 10 and 14 in 2023 to more than 60 now.

He projected that Nigeria could produce between three million and five million barrels per day over the next five years if investment commitments hold.

But he acknowledged that project costs rose after major engineering, procurement and construction contractors and deep-offshore service providers left the country during the long wait for the PIA. With fewer providers in some areas, competition fell and costs climbed, he said.

According to him, the government is talking to contractors in Europe and America to return, and a recent presidential executive order is expected to unlock almost $50 billion in deep-offshore investment. He cited Seplat Energy’s purchase of ExxonMobil’s assets and Renaissance Africa Energy’s acquisition of Shell’s onshore assets as helping revive idle wells.

Former NNPC Group Managing Director and petroleum minister Ibe Kachikwu said government interference and slow approvals held back decisions during his time, and argued Nigeria should aim for four million barrels per day by 2030 rather than three million.

Minister of State for Petroleum Resources (Gas) Ekperikpe Ekpo said the country’s 215 trillion cubic feet of proven gas reserves must translate into more domestic supply for power, fertiliser and manufacturing. He said the Compressed Natural Gas (CNG) refuelling network is being expanded from 500 to 1,000 stations.

The Olu of Warri, Ogiame Atuwatse III, said the PIA has brought calm to oil-producing communities through Host Communities Development Trusts, which receive 3 per cent of operators’ actual operating expenditure.

The Nigeria Extractive Industries Transparency Initiative (NEITI) commended the NUPRC for improving licensing and disclosure, saying it is awaiting the final report on the 2025 licensing round it monitored.

What happens next

The NUPRC is expected to conduct another licensing round, and NEITI’s final report on the last one is still pending. How quickly recovered blocks move into production will shape the government’s revenue and its production targets.