The Federal Government has indicated plans to revoke a significant number of licenses issued to marginal oil field operators that have remained inactive.
Gbenga Komolafe, the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission, informed Reuters on Monday, December 4, that only companies possessing both viable technical and financial capabilities would retain their leases. Komolafe emphasized that the commission, in alignment with the Petroleum Industry Act (PIA), is committed to delivering value for the nation.
He mentioned that the commission would conduct reviews of existing leases, and the granting of new leases would be contingent on specific terms and conditions. According to the latest data from the NUPRC, over 60% of prospecting licenses issued to local and foreign oil firms, out of 53 exploration leases issued from 2003 to the present, have expired.
Out of the 53 licenses, 33 have already expired and not been renewed, including four caught up in contract disputes. While the leases have not been automatically revoked, the regulator is no longer willing to permit companies to retain leases indefinitely.
The enactment of the PIA in 2021 empowered the regulator to scrutinize the technical and financial capabilities of companies holding oil exploration leases. Investments in oil exploration in the country have been limited as major oil companies exit onshore and shallow water assets due to escalating insecurity, sabotage of oil infrastructure, and legal disputes with communities in the Niger Delta.
