The Federal Government has hinted that it may be compelled to revoke unutilized licences granted to marginal oil field operators which have remained non-operational since issuance.
The Chief Executive Officer, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe told Reuters on Monday that only companies with viable technical and financial backup would get to keep their leases.
He said: “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.”
The NUPRC chief said the commission would initiate reviews of the affected leases and that awards of new leases would be “subject to specific terms and conditions.”
Latest data from the upstream regulatory commission showed that although about 53 exploration leases were issued from 2003 till date, over 60% of the prospecting licenses issued to local and foreign oil firms had expired.
According to the data, out of the 53 licences, 33 have since expired and not renewed, including four which are held down by contract disputes.
Though the leases have not been automatically revoked, but the NUPRC appeared to be no longer willing to let the companies hold on to leases indefinitely.
The Petroleum Industry Act (PIA) 2021 empowered the industry regulator to review the technical and financial capabilities of companies holding oil exploration leases.
Over the past few years, investments in oil exploration and production in the country had slowed even as some international oil companies (IOCs) have been divesting from onshore and shallow water assets due to rising insecurity characterized by oil infrastructure destruction, oil thefts and legal disputes with communities in the Niger Delta region, amongst other factors.
