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FG to revoke inactive oil licences as NUPRC takes a tough stand

Nigeria's Upstream Petroleum Regulatory Commission signals a crackdown on dormant oil exploration leases, emphasizing stringent criteria for lease retention under the Petroleum Industry Act

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In a strategic move to rejuvenate Nigeria’s oil sector, the Nigerian Upstream Petroleum and Regulatory Commission (NUPRC) unveiled plans to revoke dormant oil exploration leases that companies hold without conducting any exploration activities. Gbenga Komolafe, the CEO of the regulatory body, emphasized that only companies showcasing robust technical and financial capabilities would retain their leases under the Petroleum Industry Act (PIA).

Komolafe stressed the commission’s commitment to delivering value to the nation, signaling a shift toward prioritizing firms that can contribute substantively to the sector. The commission is set to conduct comprehensive reviews of existing leases, and new awards will be contingent on specific terms and conditions, as outlined by the PIA.

Recent data from the Nigerian Upstream Petroleum and Regulatory Commission revealed a concerning trend: over 60% of the exploration leases issued since 2003 have expired, totaling 33 licenses. This includes four licenses entangled in contract disputes. While the leases haven’t automatically been revoked, the regulatory stance signals a departure from allowing the indefinite holding of unused licenses.

Empowered by the PIA enacted in 2021, the regulator is now equipped to scrutinize the technical and financial capabilities of companies holding oil exploration leases. The move comes amid a backdrop of dwindling investments in Nigeria’s oil exploration, attributed to the exit of major players from onshore and shallow water assets. Factors like increasing insecurity, sabotage of oil infrastructure, and legal disputes with communities in the Niger Delta have further impeded the sector’s growth.

The Nigerian oil industry, grappling with low investments and diminished crude oil production due to pipeline vandalism, faces a pivotal juncture. The commission’s decisive actions underpin a broader effort to reshape the industry, foster sustainable growth, and mitigate the adverse impacts of a challenging operating environment.

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