morganable business/economy
The NUPRC noted that petroleum prospecting licences are granted for defined exploration periods, with extensions contingent on the discharge of work commitments within the initial term
KaNo —
The Nigerian Upstream Petroleum Regulatory Commission has issued a firm warning to holders of dormant or underperforming oil licences, setting an October 31, 2026 deadline for compliance with the “drill-or-drop” provisions of the Petroleum Industry Act (PIA) 2021.
The directive, which targets operators that have failed to meet approved work commitments, signals a renewed push by the regulator to boost crude oil and gas production by ensuring that licensed acreages are actively explored and developed.
In a circular dated September 14, 2026, and signed by the Chief Executive of the commission, Oritsemeyiwa Eyesan, the NUPRC directed affected licensees from the 2020 Marginal Field Bid Round, the 2022/2023 Mini Bid Round, and the 2024 Licensing Round to disclose their compliance status and outline steps being taken to meet their obligations.
The document, referenced NUPRC/1127/Vol.13/55, emphasised that operators risk losing their licences if they fail to demonstrate progress or provide credible plans to address delays.
According to the commission, the enforcement move is rooted in the guiding principle of the PIA that oil acreages must be actively worked within their contractual lifespan or returned to the Federal Government.
“Acreage is held to be worked, and acreage that is not worked within its term returns to the Federal Government,” the circular stated, citing Sections 77, 78, and 88 of the Act, as well as the default and revocation provisions in Sections 96 and 97.
NUPRC Noted That Licenses Are Granted For Defined Periods
The NUPRC noted that petroleum prospecting licences are granted for defined exploration periods, with extensions contingent on the discharge of work commitments within the initial term.
It stressed that compliance with obligations embedded in licensing instruments, concession agreements, and minimum work programmes is a prerequisite for retaining such licences.
“The grant carries with it obligations contained in the instruments constituting the licence, the General Licence Conditions, the Concession Contract, the Minimum Work Programme, and the Work Performance Security, which are to be read as one,” the commission stated.
“It is performance of those obligations within the term that entitles a licensee to continue to hold the licence.”
While the commission warned of possible sanctions, including revocation proceedings, refusal to grant extensions, and forfeiture of performance securities, it clarified that the primary objective is to drive production rather than penalise operators.
“The Commission’s objective is to increase production, not forfeiture,” it said.
Industry stakeholders have long expressed concerns over the slow pace of development in newly awarded oil blocks, particularly those from the marginal field programme, where several awardees have struggled to commence commercial operations years after securing licences.
NUPRC Acknowledged Challenges Faced By Operators
The NUPRC acknowledged that operators may be facing legitimate challenges, including difficulties in securing financing, limited access to drilling rigs, insecurity in oil-producing regions, and issues related to host community engagement.
Other constraints identified by the regulator include inadequate infrastructure, delays in obtaining regulatory approvals, and disputes among joint venture partners.
To address these challenges, the commission has asked affected licensees to submit detailed reports outlining their level of compliance, specific obstacles hindering execution, and proposed mitigation strategies.
“Licensees experiencing such constraints are encouraged to notify the Commission not later than 31 October 2026, stating the level of compliance with licence obligations, the specific constraints affecting execution, and the proposed mitigation measures and revised implementation timeline,” the circular stated.
However, the NUPRC made it clear that engagement with the regulator would not automatically translate into leniency or extension of licence terms.
“The Commission will not assume jurisdiction beyond its statutory mandate, displace any agreed dispute-resolution mechanism or the jurisdiction of the courts, or permit engagement with the Commission to suspend the term of a licence or excuse the performance of any obligation,” it warned.
The regulator also dismissed the notion that internal disagreements among partners could justify non-performance, stressing that such disputes would not shield operators from enforcement actions.
“Internal disagreement will not excuse failure to meet licence obligations,” it added.
The latest directive could impact dozens of companies across the three licensing rounds, with at least 62 awardees identified. However, the enforcement specifically targets those whose acreages are not meeting approved work commitments.
Under the 2020 Marginal Field Bid Round, the commission awarded 50 petroleum prospecting licences, projecting that the fields could collectively produce about 58,000 barrels of oil per day and 87 million standard cubic feet of gas per day.
The 2022/2023 Mini Bid Round, conducted under the PIA framework, initially focused on deep offshore blocks and was designed to attract new investors into Nigeria’s upstream sector.
By July 2026, the NUPRC confirmed that 12 successful bidders had been awarded 19 petroleum prospecting licences across the 2022/2023 Mini Bid Round and the 2024 Licensing Round, covering a mix of deep offshore, shallow-water, and continental shelf assets.
The 2024 Licensing Round further expanded opportunities for exploration, offering a blend of onshore and offshore blocks aimed at revitalising investment in the sector.
Analysts say the enforcement of the “drill-or-drop” policy is critical to reversing declining production levels and improving investor confidence in Nigeria’s oil and gas industry.
Nigeria has struggled to meet its OPEC production quota in recent years due to a combination of underinvestment, pipeline vandalism, and operational inefficiencies.
By compelling licensees to either develop their assets or relinquish them, the government hopes to unlock stranded resources and create opportunities for more capable investors.
The NUPRC noted that petroleum prospecting licences are granted for defined exploration periods, with extensions contingent on the discharge of work commitments within the initial term.
The NUPRC noted that petroleum prospecting licences are granted for defined exploration periods, with extensions contingent on the discharge of work commitments within the initial term.
NUPRC Reiterate Plans To Expand Nigeria’s Gas Production
Meanwhile, the NUPRC has reiterated its broader ambition to expand Nigeria’s gas production as part of its energy transition strategy.
Speaking at the 2026 Gastech conference in Bangkok, Eyesan said Nigeria aims to supply up to 70 per cent of Africa’s gas demand by significantly ramping up production.
She noted that the country currently produces about eight billion cubic feet of gas per day, despite having estimated reserves of 215 trillion cubic feet.
“Nigeria is sitting today on 215 TCF of gas. Our current gas production is about 8 BCF. That is still a very minute resource coming out of oil and gas production,” she said.
According to her, increasing output through sustained investment, improved pricing frameworks, and expanded infrastructure could position Nigeria as a leading supplier of gas across the continent.
The commission’s latest enforcement action is therefore seen as part of a broader strategy to maximise Nigeria’s hydrocarbon potential, boost revenue, and address energy deficits both domestically and across Africa.
As the October deadline approaches, operators are expected to engage with the regulator and demonstrate clear pathways to fulfilling their obligations, or risk losing access to valuable oil and gas assets.
