The Nigerian government is planning to revoke unused oil exploration leases that companies were granted but have not been able to carry out any exploration activities on them.
The Chief Executive Officer, Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, told journalists on Monday that only companies with viable technical and financial backing would get to keep their leases.
“Based on PIA (Petroleum Industry Act), the commission is focused on delivering value for the nation so only firms that are technically and financially viable will keep their leases,” Komolafe said.
Nigeria has long hoped to deregulate its petroleum sector for more private sector participation, but previous involvement has not yielded much result. For instance, The NUPRC’s most recent data shows that even though 53 exploration leases had been granted since 2003, more than 60% of the prospecting licences granted to domestic and international oil companies had already expired.
In spite of multiple investments to revitalise them, none of Nigeria’s publicly-owned refineries have been operating at full capacity for years. The high level of national anticipation surrounding the Dangote refinery is partly attributed to the failures of both the previous and present governments.
Komolafe stated that new lease awards would be “subject to specific terms and conditions” and that the commission would begin reviewing these existing agreements.
Due to growing levels of insecurity, sabotage of oil infrastructure, and legal battles with Niger Delta communities, oil majors are pulling out of onshore and shallow water assets, which has resulted in a dearth of investments in oil exploration in the nation.
The industry has also been hindered by low exploration activity, investments, and crude oil output as a result of theft and pipeline vandalism.