By Abiodun Folarin
WorldStage— The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), has moved to enforce the “Drill-or-Drop” provisions of the Petroleum Industry Act (PIA) 2021, warning holders of non-performing petroleum licences that they risk losing their acreages if they fail to meet approved work commitments.
The affected licences include Petroleum Prospecting Licences (PPLs) awarded under the 2020 Marginal Field Bid Round, 2022/2023 Mini Bid Round and 2024 Licensing Round.
The Commission, in a circular signed by its Chief Executive, Mrs. Oritsemeyiwa Eyesan, said the enforcement was part of efforts to boost upstream investment and increase crude oil and gas production by ensuring that licensed acreages are actively developed within their statutory terms.
The circular, referenced NUPRC/1127/VOL.13/55, reminded licensees that their continued possession of upstream acreages is conditional on compliance with approved work programmes and other statutory obligations within the prescribed timelines.
NUPRC said the principle underpinning the PIA was that an acreage was awarded to be worked, stressing that undeveloped acreages that remain unworked within their licence terms would ultimately revert to the Federal Government.
The Commission cited Sections 77, 78 and 88 of the PIA, alongside the default and revocation provisions contained in Sections 96 and 97, as the legal basis for the enforcement.
According to the regulator, sanctions for non-performing acreages could include refusal to extend a licence, mandatory relinquishment, calling in of work performance security and commencement of revocation proceedings.
“It is performance of those obligations within the term that entitles a licensee to continue to hold the licence,” the Commission stated.
However, NUPRC stressed that the immediate objective of the enforcement was to unlock production from dormant or underperforming assets rather than simply forfeit licences.
“The Commission’s objective is to increase production, not forfeiture,” it said.
The regulator acknowledged that several factors, including financing difficulties, rig availability, security challenges, host-community engagement, infrastructure constraints, regulatory approvals and partner arrangements, could affect the execution of approved work programmes.
It therefore directed affected licensees facing such constraints to engage with the Commission within the limits of the law and provide details of the measures being taken to address the challenges.
NUPRC gave affected licensees until October 31, 2026 to submit their compliance status, details of constraints, proposed mitigation measures and revised implementation timelines.
Specifically, licensees are required to state their level of compliance with licence obligations, including execution of approved work programmes; identify specific constraints affecting implementation; and provide proposed mitigation measures and revised timelines for completing their commitments.
The Commission, however, cautioned that its engagement with licensees would not extend beyond its statutory mandate and would not be used to suspend licence terms or excuse failure to perform contractual and statutory obligations.
It also warned that disputes between partners would not shield licensees from regulatory enforcement, stressing that internal disagreements would not constitute an excuse for failing to meet licence obligations.
The latest move underscores NUPRC’s increasing focus on converting awarded upstream acreages into actual exploration, development and production activities as Nigeria seeks to raise oil and gas output and maximise the value of its petroleum resources.
All affected licensees have been directed to submit the required information within the stipulated deadline or face enforcement measures prescribed under the PIA.
