The Federal Government will begin a mass revocation of idle oil blocks next week as the Nigerian Upstream Petroleum Regulatory Commission moves to recover assets from operators who have failed to commence development within stipulated timelines.
The Chief Executive of the NUPRC, Oritsemeyiwa Eyesan, disclosed this on Tuesday at a two-day onboarding workshop for holders of Petroleum Prospecting Licences awarded during the 2022/2023 and 2024 licensing rounds in Lagos.
Eyesan said the commission had issued a directive to recover blocks from licence holders who had failed to undertake activities within the stipulated periods, warning that operators who had held assets without making progress would no longer be allowed to retain them indefinitely.
Eyesan, who was emphatic about the plan, said some people have asked her if she was making empty threats, warning that the government would actually call in those idle assets by the end of the month.
The commission’s directive covers licence holders who have failed to meet the stipulated timelines of three years for onshore assets and five years for offshore assets, according to Eyesan.
“I’ve issued a circular, a directive, that by the 31st of this month, those who were awarded licences and have not done anything within the stipulated time (for those onshore, three years; and those offshore, five years), the commission will call in those blocks.
“And somebody asked me: is it not just empty threats? Well, if you want to wait and see the blocking, I wish you good luck. It’s going to be drill or drop. This is standard practice all over the world. In the UK, in the Netherlands, all over the world, people do not just sit on assets”, she said.
She said the move was aimed at addressing a recurring problem in the upstream petroleum sector, where some operators secure licences but struggle to progress to exploration, development and production.
Eyesan explained that some successful bidders assembled technical teams to participate in the licensing process but disbanded them after securing the assets, leaving them without the expertise required to develop the blocks.
She said such operators subsequently spent considerable time searching for technical partners or financing and later approached the commission for extensions when they could not make progress.
The NUPRC chief executive warned that the inability to secure partners or financing would not be accepted as sufficient justification for extending the time allowed for developing the assets.
“That is not going to suffice. It’s not enough ground for extension. An extension is not automatic”, she said.
Eyesan urged the new licence holders to avoid the mistakes of previous operators and ensure that they had the technical, financial and managerial capacity to run their assets.
She noted that owning an oil asset required more than the ability to meet the financial obligations involved in acquiring a licence, stressing that the business required specialised knowledge and proper corporate structures.
According to her, the commission had reviewed the experiences of operators who acquired assets during previous licensing rounds and the divestment of oil fields by international oil companies.
She said the outcomes varied considerably, with some operators successfully increasing production from previously undeveloped fields while others recorded declining output from assets they had acquired.