FG Speaks on Withdrawing Licenses of Dormant Oil Blocks in Nigeria

• Owners of oil blocks who have not developed them risk having them taken away by the FG
• This comes as FG encouraged international oil firms to invest more in the oil and gas sector
• FG plans to begin implementing the "drill or drop" clauses of the Petroleum Industry Act in 2025

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

Senator Heineken Lokpobiri, the State Minister of Petroleum Resources (Oil), threatened to take oil blocks away from owners who haven't developed them.

This comes as the Federal Government of Nigeria has urged foreign oil companies doing business in the country to increase their investment in the oil and gas industry, highlighting the fact that the current administration has offered all the incentives required to guarantee smooth and successful operations.

In keeping with the push to increase oil production, Lokpobiri stated that the government will start putting the Petroleum Industry Act's "drill or drop" provisions into effect in 2025, with the Federal Government aiming to produce 2.06 million barrels per day.

Read also

Nigerians protest as FG moves to ban importation of solar panels

The Nigerian Upstream Petroleum Regulatory Commission reported that oil production was 1.67 million barrels per day as of February 2025.

Nneamaka Okafor, the minister's media aide, said in a statement on Tuesday that Senator Lokpobiri issued the warning to cancel licenses during a Cross Industry Group meeting organized by IOCs operating in Nigeria in Florence, Italy.

The meeting's agenda was to discuss expectations, challenges, and ways to improve the sector's contributions to Sub-Saharan Africa's regional growth and domestic energy needs.

According to the minister,

“We cannot continue to have assets sitting idle for 20 to 30 years without development. If you are not utilising an asset and it remains underdeveloped for decades, it neither adds value to your books nor to us as a country.

“We encourage industry players to explore collaborative measures such as shared resources for contiguous assets, farm-outs, and the release of underutilised assets to operators ready to invest in production. Otherwise, like any responsible government, we will take back these assets and allocate them to those willing to go to work.”

Read also

NNPC announces plans to sell shares to Nigerians, takes another action

In order to avoid paying large expenditures for new floating production storage and offloading units, the minister also encouraged operators to increase their investment in the oil and gas sector and to think about farm-out arrangements when assets are near existing infrastructure.

He clarified that although IOCs have identified engineering, procurement, and construction contractors as an issue, EPCs won't make a commitment until they observe industry participants making wise investment choices.

He said,

“The government has done its part by providing the requisite and investment-friendly fiscal policies, including the president’s executive order incentivising deepwater investments. Now, the ball is in the court of the IOCs and other operators to make strategic investment decisions that will drive increased production and sustainability in the sector.”

He emphasized that IOCs must assist local refinery efforts, pointing out that more refineries are coming upstream and will need a consistent supply of crude oil.

Read also

Depot owners give reasons as they criticise naira-for-crude deal

He also emphasized that increasing production will allow Nigeria to fulfill its obligations both domestically and internationally.

Also speaking at the meeting, the Chairman of the Oil Producers Trade Section, OPTS, Mr Osagie Osunbor, commended the Minister for his direct engagement with industry players and for the Federal Government’s continued efforts in advancing the sector.

“We appreciate the government’s commitment to creating a conducive environment for investment. The minister’s engagement has provided critical insights and has also challenged us as industry players to step up efforts to increase production,” he stated.

Canadian company eyes new oil and gas opportunities in Nigeria

Legit.ng reported that Canada’s Africa Oil Corporation is working on a deal for full ownership of Prime Oil & Gas Coöperatief, a Dutch entity holding indirect interests in deep-water Nigerian fields operated by TotalEnergies and Chevron.

When the acquisition is completed it will help double Africa Oil Corporation's crude oil production to approximately 35,000 barrels per day.

Read also

FG speaks on plan to stop importation of solar panels into Nigeria, gives important reasons

Reuters reports that the transaction is set to conclude next Tuesday, marking a significant step for the corporation's growth strategy in Nigeria.

Source: Legit.ng