Nigeria’s government is cracking down on inactive oil and gas exploration licences in a bid to revitalize its petroleum sector, drive investment, and shore up public revenues. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has warned operators to either develop their oil blocks within stipulated timelines or forfeit them. The Commission’s Chief Executive, Gbenga Komolafe, delivered the warning during a meeting in Abuja with the Independent Petroleum Producers Group (IPPG). He emphasized the strict enforcement of the “drill or drop” policy—an accountability measure enshrined in the Petroleum Industry Act (PIA)—which targets companies that hoard assets without meaningful development.
“Idle licences are no longer acceptable,” Komolafe said. “Operators must begin exploration and development work promptly or risk revocation.” He added that the Minister of State for Petroleum Resources, Senator Heineken Lokpobiri, has reinforced the government’s resolve to implement the policy across the board, without exemptions. As of 2024, industry analysts estimate that over 50 oil and gas blocks awarded in previous bid rounds remain undeveloped, contributing to Nigeria’s underwhelming production levels—currently hovering around 1.4 million barrels per day, far below its OPEC quota of 1.8 million.
The NUPRC has also highlighted new measures to improve sector transparency and efficiency, including the full automation of licence and permit applications, digital tracking of asset performance, and tighter deadlines for compliance. Under the PIA, companies that fail to meet minimum work obligations—such as seismic surveys or drilling—within set timelines risk losing their operating rights. This move is expected to clear the backlog of dormant licences and make room for serious investors.
Nigeria, Africa’s largest oil producer, has been struggling to attract upstream investment in recent years due to regulatory uncertainty, crude theft, and underinvestment in infrastructure. With declining revenues and foreign reserves, the government is under pressure to unlock the sector’s full potential. In a recent report, the Nigerian Extractive Industries Transparency Initiative (NEITI) revealed that unproductive oil blocks are costing the country billions in lost revenue annually.
Industry stakeholders have cautiously welcomed the reforms but warn that the government must also address challenges such as security in oil-producing regions, delays in project approvals, and FX instability if the policy is to yield long-term results.
