NUPRC Mandates 18-Month First Oil Delivery for New Block Holders Under PIA ‘Drill or Drop’ Policy
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has issued a stringent 18-month deadline for 22 firms awarded new Petroleum Prospecting Licences (PPLs) to commence oil production. This directive, aimed at accelerating upstream development and preventing asset hoarding, signals a robust enforcement of the ‘Drill or Drop’ provision within the Petroleum Industry Act (PIA) 2021. Failure to meet this timeline will result in the forfeiture of idle acreages, effective October 30, 2026.
NUPRC Chief Executive, Mrs. Oritsemeyiwa Eyesan, conveyed this imperative at the maiden Onboarding Workshop for awardees of the 2022/2023 Mini Bid Round and the 2024 Licensing Round. The workshop, themed “From Award to Production: Delivering Nigeria’s Upstream Petroleum Potential Under the Petroleum Industry Act 2021,” underscored the Commission’s commitment to transforming the upstream sector. All 22 awardees have reportedly fulfilled their signature bonus obligations, with an anticipated production volume of approximately 250,000 barrels per day from these assets within the next five years.
Mrs. Eyesan highlighted that past bid rounds revealed a persistent challenge where many licence holders, despite meeting financial commitments, failed to progress from award to production. This pattern has historically hampered oil production and reserves growth. She cited instances of “false marriages” among bidders in the 2020 bid round and similar issues in earlier marginal field rounds and divestments, where operators lacked the requisite technical and business capacity, leading to stalled development.
To counter this, the NUPRC has issued a circular mandating the recovery of all licences with no activity within statutory timelines – three years for onshore and five years for offshore assets – from October 30, 2026. Extensions will no longer be automatic, and the inability to secure partners or funding will not be accepted as grounds for delay. “It’s going to be Drill or Drop. This is standard practice all over the world,” Mrs. Eyesan stated, reinforcing the Commission’s shift towards a business enabler role with enhanced predictability, clarity, and speed in approvals.
The onboarding workshop aims to guide awardees through the entire value chain, covering regulatory requirements, engagement protocols with the Commission, cost competitiveness, and operator responsibilities. The NUPRC expects over half of the awardees to achieve first oil within two years and drill second wells within three to four years. Furthermore, NUPRC will collaborate with the Nigerian National Petroleum Company Limited (NNPC) to de-risk frontier basins and attract investment.
Concurrently, financial and legal experts have advised the awardees that securing funding within the next six months hinges on demonstrating character, compliance, and robust governance. Financiers are scrutinising integrity, track record, and the sponsors’ true identity beyond technical promises. Key bankability requirements include a clear strategic funding plan, adherence to award conditions, and well-structured joint venture documents and shareholder agreements. Strong corporate governance, effective conflict resolution mechanisms, and technically sound, fundable work programmes are crucial for swift execution and investor confidence.
