NUPRC sets October 31 deadline for oil firms over non-performing licences

Nigeria’s upstream petroleum regulator has given holders of certain oil licences until October 31 to disclose their compliance status and explain delays in meeting approved work commitments, warning that non-performing acreages could face regulatory sanctions.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) issued the directive to holders of petroleum prospecting licences (PPLs) awarded under the 2020 Marginal Field Bid Round, 2022/2023 Mini Bid Round and 2024 Licensing Round.

The commission said affected licensees must state the level of compliance with their licence obligations, identify constraints affecting their operations and submit proposed mitigation measures and revised implementation timelines.

The directive was contained in a September 14 circular signed by NUPRC Chief Executive Oritsemeyiwa Eyesan.

The regulator said the move was aimed at increasing oil and gas production by ensuring that licensed acreages are actively explored and developed.

It warned that operators who fail to meet their obligations could face measures including refusal of licence extensions, relinquishment of acreages, the calling in of work performance securities and the commencement of revocation proceedings.

The NUPRC said the enforcement would be based on the “drill-or-drop” provisions of the Petroleum Industry Act (PIA) 2021, which require licensees to fulfil prescribed work commitments within the terms of their licences.

However, the commission clarified that the circular was a general advisory and did not itself constitute a notice of default under the PIA or its subsidiary regulations.

It also said its immediate objective was to increase production rather than automatically revoke licences, while acknowledging that operators could face challenges including financing, rig availability, insecurity, host-community engagement, infrastructure, regulatory approvals and disputes among partners.

The regulator said it could facilitate discussions or intervene where such action falls within its statutory mandate, but warned that engagement with the commission would not suspend a licence term or excuse an operator from fulfilling its obligations.

The affected licences were issued through three licensing exercises designed to attract investment and expand exploration across Nigeria’s petroleum sector.

The 2020 Marginal Field Bid Round, 2022/2023 Mini Bid Round and 2024 Licensing Round produced licences covering various onshore, shallow-water and offshore acreages.

The NUPRC said the October 31 deadline applies specifically to licensees whose acreages are not meeting their approved work commitments, rather than every company that received an award under the three rounds.

Nigeria has sought to raise crude oil and gas production by encouraging investment in upstream activities while tightening regulatory oversight of petroleum licences.

The latest directive puts operators with dormant or underperforming acreages on notice that failure to progress approved work programmes could result in the loss of their licences.