By Julius Peter, Abuja
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has commenced moves 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 their statutory work commitments.
The affected licences are those awarded under the 2020 Marginal Field Bid Round, the 2022/2023 Mini Bid Round and the 2024 Licensing Round.
The Commission, in a circular signed by its Chief Executive, Mrs. Oritsemeyiwa Eyesan, and addressed to holders of Petroleum Prospecting Licences (PPLs) from the affected licensing rounds, said the enforcement was part of the Federal Government’s broader drive to increase crude oil and gas production.
The circular, with reference number NUPRC/1127/VOL.13/55, reminded licensees that their licences have finite terms and that they are legally required to execute approved work programmes within timelines prescribed by law.
According to the Commission, the regulatory framework established by the PIA is based on the principle that oil and gas acreages are granted for the purpose of exploration and development and should not be held indefinitely without productive activity.
It stated: “An acreage is held to be worked, and any acreage that is not worked within its term returns to the Federal Government.”
The Commission said the principle was backed by Sections 77, 78 and 88 of the PIA, as well as the default and revocation provisions contained in Sections 96 and 97.
NUPRC consequently warned that it would enforce the provisions of the law against non-performing acreages, outlining possible sanctions to include refusal of licence extensions, compulsory relinquishment, calling in work performance security and commencement of revocation proceedings.
The Commission stressed that continued possession of an oil and gas licence was conditional upon the holder meeting the obligations attached to the acreage.
“It is performance of those obligations within the term that entitles a licensee to continue to hold the licence,” the circular stated.
However, the regulator clarified that its primary objective was not to confiscate licences but to ensure that awarded acreages contribute to the nation’s production targets.
“The Commission’s objective is to increase production, not forfeiture,” it stated.
The Commission also recognised that several factors could affect the ability of operators to execute their approved work programmes.
Among the challenges identified were financing difficulties, availability of drilling rigs, insecurity, host-community engagement, infrastructure constraints, regulatory approvals and disagreements among partners.
NUPRC said it was prepared, within the limits of its statutory mandate, to assist affected licensees in resolving legitimate challenges that may be impeding their ability to meet their obligations.
To this end, the Commission gave affected operators until October 31, 2026, to formally notify it of their compliance status and provide details of any constraints affecting the execution of their approved work programmes.
The affected licensees are expected to provide information covering three key areas.
First, they must state their level of compliance with the obligations attached to their respective licences, including the extent to which they have executed their approved work programmes.
Second, they are required to identify specific constraints that have affected implementation.
Third, they must submit proposed mitigation measures and revised timelines for completing the outstanding work.
The Commission said the information would enable it to assess the status of the affected acreages and determine appropriate regulatory action within the provisions of the law.
NUPRC, however, cautioned licensees that regulatory engagement should not be interpreted as an automatic suspension or extension of licence terms.
The Commission said it would “not assume jurisdiction beyond its statutory mandate” and would not allow engagements with operators to suspend the running of licence terms or excuse licensees from their statutory performance obligations.
It also warned that disputes between partners would not constitute a shield against regulatory enforcement.
According to the Commission, internal disagreements among partners cannot relieve a licence holder of its legal responsibility to fulfil the obligations attached to the licence.
The latest directive underscores the regulator’s renewed emphasis on ensuring that awarded oil and gas assets translate into actual exploration, development and production activities.
The enforcement of the “Drill-or-Drop” principle is expected to put additional pressure on operators whose projects have remained stalled or whose approved work programmes have not been implemented within the required timelines.
The policy is also aimed at preventing speculative holding of petroleum assets and ensuring that acreage allocated by the Federal Government is actively developed.
The NUPRC therefore urged all affected licence holders to submit the required information before the October 31 deadline, warning that failure to demonstrate compliance or provide satisfactory mitigation plans could expose non-performing acreages to the enforcement measures provided under the PIA.
The Commission reiterated that its focus remained on stimulating upstream investment and increasing Nigeria’s oil and gas production, while ensuring that licence holders fulfil the obligations for which the assets were awarded.
