The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has announced a 2025 licensing round, activating the 'Drill or Drop' clause from the Petroleum Industry Act (PIA) 2021, which emphasising a three-year deadline for oil operators to commence production or relinquish their licenses.
This initiative aims to boost oil production and ensure efficient resource management in Nigeria's upstream sector.
This is as 25 winners emerged in the oil blocks put on sale for the 2024 oil bid round.
Commission chief executive of the NUPRC, Gbenga Komolafe, made the announcement on Wednesday at the 2024 Licensing Round Commercial Bid Conference In Lagos.
According to him, the 2025 licensing round would focus on underexplored assets, fallow fields, and natural gas development as part of Nigeria's commitment to the UN Sustainable Development Goals.
Komolafe emphasised that the NUPRC aims to make the licensing rounds an annual event to address challenges such as declining production and rising global competition.
Komolafe said, declining production levels and increased global competition demand strategic action. Fortunately, the Petroleum Industry Act has given us a unique opportunity to transform the industry, attract investment, and position Nigeria as a leader.
"To this end, I am pleased to announce that the NUPRC will launch another licensing round in 2025. Building on the lessons learned from this year's round, the 2025 exercise will focus on discovered and undeveloped fields, fallow assets, and prioritise natural gas development to support Nigeria's commitment to the UN Sustainable Development Goals."
Komolafe further explained that the regulator's focus has been on restoring investor confidence in the industry, adding that this has been achieved by ensuring that its activities are fully aligned with the provisions of the Petroleum Industry Act.
He said, "What we are doing here today is not a matter of discretion by the commission but is in line with the statutory provisions of the Petroleum Industry Act.
The law stipulates that the commission should conduct licensing rounds.
"The law did not make it annual, but to ensure that we grow, preserve, and optimise our hydrocarbon resources, as I said, we are committed to annual licensing rounds. And that's why I said that at the conclusion of this (2024) exercise, we will commence another one in 2025."
The CCE also stated that the commission has begun recovering idle assets based on the 'drill or drop' provision of the Petroleum Industry Act.
"There is a provision in the Petroleum Industry Act that speaks to 'drill or drop'. We have been engaging with the industry to ensure that unexplored areas and resources are returned to production. We intend to revitalise these idle assets, as many of them remain unused, which is not the intent of the Petroleum Industry Act.
"So, as a commission and as a regulator, we have started activating the 'drill or drop' provisions of the Petroleum Industry Act, which is intended to ensure that our assets do not remain idle. We are reintegrating them into the pool, and they will be available for bidding by interested parties in the next licensing round," he added.
Meanwhile, after tedious digital exercise the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has announced winners of oil blocks put on sale for the 2024 oil bid round.
The exercise was witnessed by key industry players, including indigenous, international oil companies as well as the Nigeria Extractive Industries Transparency Initiative (NEITI). In all 31 oil blocks were put on offer and 25 companies bidded while six blocks were not bidded for.
The results as announced by Komolafe, showed following companies, Sifax and Royalgate consortium, Oceangate Engineering oil and gas, MRS oil and gas, Sifax and Royalgate Consortium, Sahara Deepwater resources, TotalEnergies among others winning various Petroleum Prospecting Leases (PPL) blocks.
Speaking before the exercise, Komolafe, said the event is truly both unique and historic in the annals of block licensing rounds in Nigeria, as it marks the first since the Petroleum Industry Act was enacted in August 2021.
He said the world is undergoing an unprecedented energy transition and that global clean energy is now reported to be about twice as much as the investment in fossil fuels (IEA's World Energy Investment 2024).
Rising investments in clean energy technologies and infrastructure has pushed overall energy investment above USD 3 trillion for the first time in 2024 (IEA), he said adding "However, OPEC, the IEA, and other energy outlooks indicate that fossil fuel will continue to dominate the global energy mix with projections that oil and gas will remain the backbone of the global energy mix in the medium to long term, driven by population growth, urbanization, and economic expansion in developing economies."
Komolafe noted further that projections by BP and ExxonMobil align with OPEC and IEA that oil and gas will still account for over half of the global energy supply by 2050, also emphasising the continuing role of natural gas as a transition fuel, particularly in our region, where energy access and affordability remains a priority.
The above projections and narratives je said affirms the enduring importance of oil and gas amidst advocacy for an accelerated shift to renewable energy resources.
In the face of these projections, Nigeria must strategically position itself to harness our vast resources and meet both domestic and global energy demands.
The NUPRC boss said the projections further highlight the necessity for more frequent licensing rounds in Nigeria, and the ongoing Licensing Round is a pivotal step towards growing the nation's oil and gas reserves through aggressive exploration and development and boosting production while expanding opportunities for gas utilization across the value chain.
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This he said would also enhance energy security and economic growth, attract investments while creating employment opportunities and enabling technology transfer as well as optimise the value from our petroleum assets and ensure sustainable development.
Komolafe said Nigeria remains one of the most resource-rich nations in the world with 209 trillion cubic feet of natural gas reserves and over 37 billion barrels of oil reserves, and the country has only just begun to scratch the surface of her hydrocarbon potential.
"There are also significant opportunities for growth, given the vast speculative resources and upside potentials that are yet to be explored. These present opportunities for resource maturation and optimization, which can only be fully realised through licensing rounds, aggressive exploration, and accelerated development," he said.
He added that the 2024 Licensing Round, launched in May, represents a significant leap in Nigeria's hydrocarbon development strategy. "The licensing round offers 24 carefully selected blocks spanning onshore, shallow water, and deep offshore terrains. Complementing these are the seven deep offshore blocks carried over from the 2022 Mini Bid Round, bringing the total to 31 blocks.
" Together, these assets hold enormous potential for economic growth, energy security, and technological advancement," he noted.
