According to the Nigerian Upstream Petroleum and Regulatory Commission, the Federal Government intends to revoke unused oil exploration leases awarded to firms but not used for exploration.
Gbenga Komolafe, Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission, told Reuters on Monday that only businesses with viable technical and financial backup would be allowed to keep their leases.
“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,” he said.
According to Komolafe, the commission will begin reviewing current leases, and new leases will be awarded “subject to specific terms and conditions.”
According to the most recent NUPRC data, despite the fact that approximately 53 exploration leases were given from 2003 to the present, more over 60% of the prospecting licenses issued to domestic and foreign oil companies have expired.
Thirty-three of the 53 licenses have subsequently expired and have not been renewed, including four that are being held up by contract issues. The leases were not automatically terminated, but the regulator is no longer willing to let the corporations keep the leases indefinitely.
The PIA, which was passed in 2021, gave the regulator the authority to examine the technical and financial capacities of businesses that hold oil exploration leases.
Oil exploration investments in the country have been few and far between as oil majors depart onshore and shallow sea assets due to rising insecurity, sabotage of oil infrastructure, and legal issues with Niger Delta tribes.
Since then, the sector has been hampered by low investment in exploration efforts, as well as low crude oil output as a result of pipeline vandalism.