The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has announced plans to launch another oil licensing round in 2025, leveraging the “Drill or Drop” clause from the Petroleum Industry Act (PIA) 2021, which mandates oil operators to commence production within three years or relinquish their licenses.
This initiative aims to boost oil production, enhance resource management, and attract investments in the upstream petroleum sector. NUPRC Chief Executive, Gbenga Komolafe, disclosed this on Wednesday during the 2024 Licensing Round Commercial Bid Conference in Lagos.
Komolafe highlighted that the 2025 licensing round will prioritize underexplored assets, idle fields, and natural gas development to align with Nigeria’s commitment to the UN Sustainable Development Goals (SDGs). He emphasized the importance of holding annual licensing rounds to address challenges like declining production and global competition in the oil and gas sector.
“The Petroleum Industry Act has provided us with a unique opportunity to transform the industry, attract investments, and position Nigeria as a leader. The 2025 licensing round will focus on discovered but undeveloped fields, fallow assets, and natural gas development,” Komolafe stated.
The NUPRC also announced the activation of the PIA’s “Drill or Drop” clause, which mandates the recovery of idle assets from operators who fail to commence production. These recovered assets will be reintegrated into the bidding pool for future licensing rounds.
During the 2024 licensing round, 31 oil blocks were offered, with 25 companies emerging as winners. Participants included Sifax and Royalgate Consortium, Oceangate Engineering, MRS Oil and Gas, Sahara Deepwater Resources, and TotalEnergies. Six blocks, however, received no bids.
Speaking at the event, Komolafe described the licensing round as historic, being the first conducted under the PIA since its enactment in 2021. He noted that the global energy landscape is shifting toward clean energy, but projections by OPEC, the International Energy Agency (IEA), and other organizations suggest that oil and gas will remain a significant part of the energy mix until 2050, driven by population growth and economic expansion in developing economies.
“Nigeria, with its vast resources of 209 trillion cubic feet of natural gas and over 37 billion barrels of oil reserves, must strategically position itself to meet both domestic and global energy demands. Licensing rounds, aggressive exploration, and accelerated development are key to optimizing our hydrocarbon potential,” Komolafe said.
The NUPRC chief further highlighted the economic benefits of frequent licensing rounds, including boosting reserves, expanding gas utilization, attracting investments, creating employment, and enhancing energy security. He noted that the 2024 licensing round, launched in May, offered 31 blocks across onshore, shallow water, and deep offshore terrains, representing a significant step in Nigeria’s hydrocarbon development strategy.
“These assets hold enormous potential for economic growth, energy security, and technological advancement. They represent a critical component of our strategy to optimize the value of Nigeria’s petroleum resources while ensuring sustainable development,” Komolafe concluded.
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