The Nigerian Upstream Petroleum and Regulatory Commission has announced that the Federal Government intends to cancel oil exploration leases that were granted to companies but remain unused without any exploration activities.
The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, informed Reuters on Monday that only companies possessing both viable technical expertise and financial support would retain their leases.
“Based on PIA (Petroleum Industry Act), the commission is focused on delivering value for the nation, so only firms that are technically and financially viable will keep their leases,” Komolafe said.
Komolafe said the commission would initiate reviews of these leases, and awards of new leases would be “subject to specific terms and conditions.”
The most recent data from the NUPRC reveals that, despite the issuance of approximately 53 exploration leases from 2003 until now, more than 60 percent of the prospecting licenses granted to both local and foreign oil companies have lapsed.
Out of the 53 licenses issued, 33 have already expired and remain unrenewed, with four of them entangled in contract disputes. While the leases have not been automatically revoked, the regulatory body is no longer inclined to allow companies to retain these leases indefinitely.
The enactment of the Petroleum Industry Act (PIA) in 2021 has empowered the regulator to assess the technical and financial capabilities of companies holding oil exploration leases.
Investments in oil exploration within the country have been limited, as major oil companies withdraw from onshore and shallow water assets due to escalating insecurity, sabotage of oil infrastructure, and legal disputes with communities in the Niger Delta.
The sector has been hampered by insufficient investments in exploration activities, further compounded by reduced crude oil production due to theft resulting from pipeline vandalism.
