The Federal Government has announced its intention to revoke oil well licenses that have remained undeveloped for up to 30 years, in line with the “drill or drop” provisions of the Petroleum Industry Act (PIA) 2021. Licensees who fail to initiate drilling operations risk losing both their licenses and ownership of the facilities.
The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, made this declaration during the Cross Industry Group (CIG) Meeting held in Florence, Italy. The event, organized by International Oil Companies (IOCs) operating in Nigeria, served as a platform for discussing the country’s oil and gas sector.
Lokpobiri emphasized that any proactive government would revoke licenses for undeveloped assets and reallocate them to investors willing to initiate drilling activities. He urged industry stakeholders to consider collaborative measures such as shared resources for contiguous assets, farm-outs, and the release of underutilized assets to willing operators.
“We cannot continue to have assets sitting idle for 20 to 30 years without development. If you are not utilizing an asset and it remains underdeveloped for decades, it neither adds value to your books nor to us as a country,” Lokpobiri said.
He also encouraged operators to adopt farm-out agreements, especially for assets located near existing infrastructure, rather than incurring high costs on new Floating Production Storage and Offloading (FPSO) units.
Government Committed to Boosting Production
Lokpobiri reassured stakeholders of the Federal Government’s commitment to creating an investment-friendly environment. He noted that the administration of President Bola Tinubu had introduced fiscal policies, including an Executive Order to incentivize deepwater investments.
However, the minister stressed that the responsibility now lies with IOCs and other operators to make strategic investment decisions that will enhance production and sustainability.
The Chairman of the Oil Producers Trade Section (OPTS), Osagie Osunbor, commended the Federal Government’s proactive approach and acknowledged the need for the industry to step up production efforts.
“We appreciate the government’s commitment to creating a conducive environment for investment. The Minister’s engagement has provided critical insights and challenged us as industry players to increase production,” Osunbor stated.
The government also called on operators to support local refining initiatives, as more refineries are expected to come online, requiring a steady supply of crude oil. The Federal Government remains determined to ensure a thriving oil and gas industry, urging stakeholders to match its commitment by making tangible investments that will foster growth, sustainability, and national energy security.
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