Nigeria: NUPRC Gives 22 New Oil Block Holders 18 Months To Deliver First Oil

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has given 22 firms awarded Petroleum Prospecting Licences (PPLs) 18 months to achieve first oil, warning that it will begin recovering idle blocks on October 30, 2026.

The commission’s chief executive, Oritsemeyiwa Eyesan, said the move was in line with the “drill or drop” provisions of the Petroleum Industry Act 2021.

Eyesan was speaking in Lagos at the inaugural onboarding workshop for successful bidders in the 2022/2023 Mini Bid Round and the 2024 Licensing Round.

The workshop was held under the theme: “From Award to Production: Delivering Nigeria’s Upstream Petroleum Potential Under the Petroleum Industry Act 2021.”

Eyesan said all 22 awardees had paid their signature bonuses. The commission expects their assets to contribute about 250,000 barrels per day to Nigeria’s oil production within five years, she added.

She said the workshop followed a review of previous bid rounds, which found that many licence holders struggled to move from award to production despite meeting their financial obligations, slowing growth in output and reserves.

Eyesan described the 2020 bid round as the most challenging in the commission’s history, citing partnerships formed to secure blocks that subsequently broke down, leaving the assets without stable ownership and operating structures.

Similar problems arose during earlier marginal field rounds and asset divestments between 2010 and 2012, when some companies acquired assets without the technical expertise and business capacity needed to operate them, she said.

Some operators increased production from previously non-producing assets to more than 60,000 barrels per day, Eyesan said. Others saw combined output from mature fields fall to between 20,000 and 30,000 barrels per day from between 60,000 and 80,000 barrels per day under their previous owners.

She said some companies relied on Excel spreadsheets for their oil and gas accounting, which she cited as evidence of weak operating structures.

Some awardees assembled technical teams for the bidding process but disbanded them after securing licences, she added. They then left assets idle while seeking technical partners and financing, before returning about two and a half years later to request extensions.

Eyesan said the commission had issued a circular stating that, from October 30, it would recover blocks where licence holders had failed to undertake activities within the stipulated periods of three years for onshore assets and five years for offshore assets.

Extensions would not be automatic, she said, adding that difficulties securing partners or funding would no longer be accepted as grounds for an extension.

“It’s going to be Drill or Drop. This is standard practice all over the world,” she said.

Emeka Nkemakolam, assistant general manager and head of energy and power at Fidelity Bank, said investors needed a clear funding strategy and evidence of compliance with licence conditions, including obligations relating to rents, signature bonuses and performance bonds.

Such compliance demonstrated that a company was a credible prospective borrower, he said.

Panellists also identified governance and documentation as key requirements for securing finance. They said joint venture documents, shareholder agreements and internal governance arrangements should be finalised within six months and structured to meet lenders’ requirements.