NUPRC Escalates Enforcement: Non-Performing Oil Licences Face Revocation Deadline
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has issued a stern ultimatum to holders of non-performing oil licences, signalling a robust enforcement of the “Drill-or-Drop” provisions enshrined in the Petroleum Industry Act (PIA) 2021. Operators failing to meet approved work commitments risk forfeiture of their acreages, a move designed to invigorate Nigeria’s oil and gas production.
Affected licensees, spanning the 2020 Marginal Field Bid Round, 2022/2023 Mini Bid Round, and the 2024 Licensing Round, have until October 31, 2026, to demonstrate compliance. This directive, detailed in a circular signed by NUPRC Chief Executive Oritsemeyiwa Eyesan, mandates operators to disclose their current compliance status, identify operational impediments, and submit revised plans for fulfilling their contractual obligations. At least 62 awardees have been identified across these exercises, with the deadline specifically targeting those whose acreages are demonstrably underperforming against agreed work programmes.
The NUPRC’s enforcement drive is underpinned by the PIA’s core principle: “acreage is held to be worked, and acreage that is not worked within its term returns to the Federal Government.” Citing Sections 77, 78, 88, 96, and 97 of the Act, the commission asserts its authority to refuse licence extensions, demand relinquishment of acreages, call upon work performance securities, and initiate revocation proceedings. Licence extensions are contingent upon terrain and the fulfilment of work commitments, which encompass terms within licence instruments, General Licence Conditions, Concession Contracts, Minimum Work Programmes, and Work Performance Security.
Crucially, the NUPRC’s immediate objective is to bring dormant or underperforming assets into production, rather than pursuing automatic licence revocation. “The Commission’s objective is to increase production, not forfeiture,” the circular states. The regulator acknowledges potential challenges faced by licensees, including financing, rig availability, insecurity, host community engagement, infrastructure deficits, regulatory hurdles, and intra-partner disputes. Operators are required to detail these constraints and propose mitigation strategies alongside revised timelines by the October 31 deadline. While the NUPRC will facilitate solutions where feasible, this engagement will not extend licence terms or absolve operators of their contractual duties. Furthermore, internal disagreements among partners will not serve as an excuse for non-compliance.
The licences in question stem from recent bid rounds aimed at attracting investment and accelerating exploration. The 2020 Marginal Field Bid Round saw 50 Petroleum Prospecting Licences (PPLs) issued, with projections of significant daily production. The 2022/2023 Mini Bid Round and the 2024 Licensing Round, conducted under the PIA framework, awarded PPLs across deep offshore, shallow-water, and continental-shelf acreages, reinforcing the expectation of active development. This directive serves as a clear signal to all awardees that securing acreage entails ongoing work obligations, with regulatory action as the consequence of failure.
