The Federal Government of Nigeria has said it would soon begin enforcement of the “drill or drop” provisions of the Petroleum Industry Act (PIA), which empowers the government to take over idle assets abandoned by oil firms for an extended period.
This was disclosed by the Minister of State for Petroleum Resources (Oil), Sen. Heineken Lokpobiri, at the Cross Industry Group (CIG) Meeting in Florence, Italy, where he engaged industry leaders on challenges and opportunities in Nigeria’s energy sector.
He said the decision is part of efforts to boost production in Nigeria.
“We cannot continue to have assets sitting idle for 20 to 30 years without development.
“If you are not utilizing an asset, it neither adds value to your books nor to us as a country. We will take back these assets and allocate them to those willing to invest,” Lokpobiri warned.
He advised that to maximize resources, the government is encouraging industry players to consider farm-out agreements—where smaller firms develop underutilized assets—or collaborate on shared infrastructure instead of incurring high costs on new Floating Production Storage and Offloading (FPSO) units.
“We encourage industry players to explore collaborative measures such as shared resources for contiguous assets, farm-outs, and the release of underutilized assets to operators ready to invest in production.
“Otherwise, like any responsible government, we will take back these assets and allocate them to those willing to go to work,” he said.
Nigeria urges oil majors to ramp up investments
Senator Lokpobiri also called on International Oil Companies (IOCs) operating in Nigeria to increase their investments in the country’s oil and gas sector.
- He emphasized that the government has put new fiscal incentives in place to attract more capital into exploration and production.
- Lokpobiri noted that President Bola Tinubu’s administration had created an investment-friendly climate, including executive orders incentivizing deep-water exploration. However, he urged IOCs to take decisive action, particularly in making stronger commitments to engineering, procurement, and construction (EPC) projects.
“The government has done its part by providing the requisite and investment-friendly fiscal policies, including the President’s Executive Order incentivizing deep water investments.
“Now, the ball is in the court of the IOCs and other operators to make strategic investment decisions that will drive increased production and sustainability in the sector,” the minister said.
The Chairman of the Oil Producers Trade Section (OPTS), Osagie Osunbor, commended the government’s engagement with industry players and acknowledged the need for increased investments.
“The minister’s engagement has provided critical insights and has also challenged us as industry players to step up efforts to increase production,” Osunbor told the News Agency of Nigeria.
What you should know
- Nigeria is Africa’s largest oil producer in Africa, but it struggles to increase production due to issues such as infrastructure decay, oil theft, and underinvestment.
- By enforcing its policies and providing incentives, the government hopes to revitalize the sector, ensuring both domestic energy security and sustained international exports.
