|
Getting your Trinity Audio player ready...
|
“Drill or Drop”: Nigeria Tells Oil Firms to Stop Treating Licences as Trophies
For decades, owning an oil block in Nigeria could signal status as much as business intent. Companies won licences, filed them away and sometimes waited ten, twenty or thirty years. The federal government now says that practice is finished, and it has started taking back acreage to prove the point.
Oil Minister of State Heineken Lokpobiri put it bluntly at an industry event reported by ThisDay on October 26. The drill-or-drop provision, he said, is one of the most consequential parts of the Petroleum Industry Act, and the era of holding assets as souvenirs or symbols of wealth is gone: you either drill or drop. Under the law, a licence holder must develop its asset within a stated period or lose it, and the upstream regulator can recover the acreage and offer it to investors willing to work it.
Officials describe the rule as a tool with several jobs. It is meant to discourage speculative ownership and hoarding of blocks, speed up exploration and development, attract fresh investment and lift oil and gas output toward national targets. Lokpobiri said the policy is already freeing up assets for new investment, with 50 assets recently offered for bidding and another licensing round on the way. He added that some operators are giving assets back voluntarily instead of waiting to be stripped of them. The same message ran through earlier statements: in 2025 he argued the country could not continue to have assets sitting idle for 20 to 30 years without development.
The enforcement is concrete. The Nigerian Upstream Petroleum Regulatory Commission issued a notice dated September 14 telling holders of prospecting licences from the 2020 marginal field round, the 2022 and 2023 mini round and the 2024 round to prove they have met work commitments by October 31, with penalties including refused extensions, forced relinquishment, calling in performance bonds and revocation. The commission has already reported recovering more than 50 fallow fields, which return to the pool for reallocation. Winners of the 2025 licensing round faced their own payment deadline on October 19.
Two examples of what officials say the policy is meant to produce were cited on Monday. After Seplat Energy bought ExxonMobil’s Nigerian shallow-water assets and Renaissance Africa Energy bought Shell’s onshore business, the minister said, previously inactive wells were being revived. Those deals involved moving assets from international majors to Nigerian-owned operators, a shift that has been reinforced by TotalEnergies’ $800 million sale of its Renaissance stake, completed on October 27.
Gas sits beside oil in the plan. Ekperikpe Ekpo, the minister responsible for gas, said that over the next five years Nigeria must convert its 215 trillion cubic feet of proven gas reserves into higher production, stronger infrastructure and industrial growth. Success, he said, means reliable gas for power generation, fertiliser, petrochemicals, manufacturing, cooking gas and compressed natural gas, together with regional pipeline supply and liquefied natural gas exports. Another speaker, identified in coverage as Adar, argued that ambitions should extend beyond crude to domestic refining and petrochemicals so the country keeps more value and relies less on imported fuel.
Lokpobiri also offered a growth projection and an explanation of costs. He said Nigeria could raise crude output to between 3 million and 5 million barrels a day over the next five years if investment commitments and development programmes materialise. That is well above September’s average of 1.717 million barrels a day and above the official 3 million target for 2030, so the upper end depends on conditions that have not yet been met. He also said the exit of engineering and construction contractors has left only a few service providers in some critical areas, which pushes up project costs, a point that echoes the equipment financing concerns raised this week by oilfield service companies.
Not everyone sees only progress. Former NNPC chief Emmanuel Kachikwu, quoted at the same event, described how government interference delayed decisions during his tenure, and speakers noted that for years the sector behaved like a government agency, which limited creativity. The Nigeria Extractive Industries Transparency Initiative said the upstream regulator has brought greater openness to bid rounds. Whether that openness extends to how recovered assets are reallocated will determine if the policy opens the field to serious operators or simply shifts blocks among well-connected owners.
What should readers watch? First, the October 31 compliance deadline and how many licence holders miss it. Second, the identity of the companies that receive recovered blocks and the terms they accept. Third, whether production responds: rigs have climbed past 70 and crude has run at or above quota for five months, but the targets require much more. The government’s declaration is clear. Proof will come from the barrels.
