Nigeria’s Oil Regulator Moves To Cancel Idle Exploration Licenses
By Abigail Daniel
The Nigerian Upstream Petroleum and Regulatory Commission (NUPRC) on Monday announced plan to cancel licences awarded for oil exploration but haven’t been use for any exploration work.
NUPRC Chief Executive Officer, Gbenga Komolafe disclosed this while speaking with Reuters.
Over 60% of the prospecting licences granted to domestic and international oil companies had expired, according to the most recent statistics from the Nigerian Upstream Petroleum and Regulatory Commission (NUPRC), at a time when the nation is looking for new investment to increase output.
53 exploration licences were granted to oil corporations by the Nigerian government, some of which date back to 2003. However, 33 of these leases have since expired and have not been renewed, including four that are stalled in contract disputes. Although the leases haven’t been automatically terminated, the regulator isn’t going to allow the businesses to keep their leases indefinitely.
The largest oil producer in Africa, Nigeria, has suffered a drop in oil production as a result of pipeline vandalism, theft of crude, and a lack of new investment.
Komolafe said: “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.”
The Niger Delta-based exploration unit of TotalEnergies and the publicly traded energy company Oando (OANDO.LG) own a portion of the expired leases.
Nigeria passed an oil industry reform law in 2021 that gave the regulator the authority to assess the financial and technical standing of businesses that had leases for oil exploration.
The commission will begin reviewing current leases, according to Komolafe, and the awarding of new leases will be “subject to specific terms and conditions.”
Owing to escalating levels of instability, sabotage of oil infrastructure, and legal issues with Niger Delta communities, oil majors are abandoning their onshore and shallow water assets, making investments in oil exploration in Nigeria rare and infrequent.