FG to Revoke Oil Licences from Onwers Yet to Develop Them so as to Meet 2.06 million Daily Target
The Federal Government has threatened to Revoke licences of oil acreages which remains unproductive so as to meet set a production target of 2.06 million barrels per day by 2025.
The threat was handed down by Minister of State, Petroleum Resources (Oil), Senator Heineken Lokpobiri who explained they needed to ramp up production to fund the 2025 budget..
Speaking at a Cross Industry Group meeting in Florence, Italy, organized by International Oil Companies (IOCs) operating in Nigeria, Senator Lokpobiri emphasized the need for oil block owners to either “drill or drop” their assets.
The meeting, which focused on challenges, expectations, and strategies to enhance the sector’s contributions to domestic energy needs and regional expansion across Sub-Saharan Africa, brought together key stakeholders in the oil and gas industry.
According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the country’s oil production currently stands at 1.67 million barrels per day, as of February 2025. The Minister attributed the low production levels to the lack of development of oil blocks, some of which have been idle for 20 to 30 years.
“We cannot continue to have assets sitting idle for decades without development. If you are not utilizing an asset and it remains underdeveloped for decades, it neither adds value to your books nor to us as a country. We encourage industry players to explore collaborative measures such as shared resources for contiguous assets, farm-outs, and the release of underutilized assets to operators ready to invest in production. Otherwise, like any responsible government, we will take back these assets and allocate them to those willing to go to work,” Lokpobiri insisted.
The Minister also urged operators to consider farm-out agreements where assets are close to existing infrastructure, rather than incurring high costs on new Floating Production Storage and Offloading (FPSO) units. He emphasized the need for IOCs to ramp up investment in the oil and gas industry, noting that the administration of President Bola Ahmed Tinubu has provided every necessary incentive to ensure seamless and profitable operations.
Senator Lokpobiri explained that while IOCs have pointed to Engineering, Procurement, and Construction (EPC) contractors as a challenge, EPCs will only commit when they see strong investment decisions from industry players.
“The Government has done its part by providing the requisite and investment-friendly fiscal policies, including the President’s Executive Order incentivizing deepwater investments. Now, the ball is in the court of the IOCs and other operators to make strategic investment decisions that will drive increased production and sustainability in the sector,” he said.
The Minister also stressed the need for IOCs to support local refining efforts, noting that more refineries are coming on stream and will require a steady supply of crude oil.
“Ramping up production will enable Nigeria to meet both local and international obligations,” he added.
The Chairman of the Oil Producers Trade Section (OPTS), Mr. Osagie Osunbor, commended the Minister for his direct engagement with industry players and for the Federal Government’s continued efforts in advancing the sector. “We appreciate the government’s commitment to creating a conducive environment for investment. The Minister’s engagement has provided critical insights and has also challenged us as industry players to step up efforts to increase production,” he stated.
The threat to revoke idle oil blocks is seen as a major step towards achieving the government’s production target and boosting the country’s oil revenue. With the global demand for oil expected to remain high, Nigeria’s oil industry is poised for significant growth, and the government is determined to ensure that the sector contributes maximally to the country’s economic development.
As the government moves to implement the “drill or drop” provisions of the Petroleum Industry Act (PIA), industry players are expected to take immediate action to develop their oil blocks or risk losing them. The move is also expected to attract new investors to the sector, as the government offers incentives and creates a conducive environment for investment.
In related news, the NUPRC has announced plans to conduct a thorough review of all oil blocks in the country to identify those that are not being developed. The commission will work closely with the Ministry of Petroleum Resources to ensure that oil block owners are held accountable for their assets and that the government’s production target is achieved.
The development is seen as a positive step towards boosting Nigeria’s oil production and revenue, and industry players are expected to respond positively to the government’s call to action. As the country moves towards achieving its production target, the oil and gas sector is expected to play a major role in driving economic growth and development.
