The Federal Government is considering revoking oil exploration leases that were granted to companies by the Nigerian Upstream Petroleum and Regulatory Commission (NUPRC) but have remained unused without any exploration activities.
Gbenga Komolafe, the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission, emphasized that only companies possessing robust technical and financial support would retain their leases.
According to the latest data from the Nigerian Upstream Petroleum and Regulatory Commission (NUPRC), over 60% of prospecting licenses allocated to local and foreign oil firms have expired. This occurs amid the nation’s efforts to attract new investments aimed at boosting oil production.
- “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 stated.
Some of the expired leases belong to the listed energy firm Oando (OANDO.LG) and the exploration unit of TotalEnergies, all in the Niger Delta.
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Nigeria, the largest oil producer in Africa, has experienced a drop in oil production attributed to crude theft, pipeline vandalism, and insufficient new investments in the sector.
In 2021, Nigeria implemented a reform in its oil industry, granting the regulator the authority to assess the technical and financial capacities of companies with oil exploration leases.
The federal government issued 53 exploration leases, some dating back to 2003, to oil companies but 33 have since expired and not renewed, including four which are bogged down by contract disputes.
The leases have not been automatically revoked, but the regulator is no longer willing to let the companies hold on to leases indefinitely.
Moreover, investments in oil exploration in Nigeria have been few and far between as oil majors exit onshore and shallow water assets due to rising insecurity and sabotage of oil infrastructure and legal disputes with communities in the Niger Delta.
