Uche Cecil Izuora
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) may be considering renewal of expired 40 oil licenses but strictly following guidelines according to the law.
About 40 oil licences will expire in June 2025.
According to the Commission’s Upstream Concession Situation Report in May, the various licences, which were granted to different companies on June 28, 2022, will expire on June 27, 2025 and these include petroleum prospecting licences granted to oil companies after the completion of the 2020 marginal fields bid round.
The NUPRC said the law provides for an optional extension of three or five years, however, the extension will depend on the company’s performance.
According to the Petroleum Industry Act (PIA) and other regulations, an application shall be made to the Commission for renewal of an oil mining lease or conversion under certain regulations.
“In the case of a production sharing contract, the application shall be made by the concessionaire. In the case of indigenous Nigerian companies on a sole risk basis for which the government has not backed in, the application shall be made by the concessionaire(s), which include assignees.
“In the case of a joint venture, the application shall be made jointly by the concessionaire(s). In the case of marginal fields, the application shall be made jointly by the awardee(s). In the case of a renewal of an oil mining lease granted to Nigerian companies on a sole risk basis for which the government has successfully backed in, the application shall be made and signed jointly by the concessionaire(s).
“In the case of an oil mining lease, an application for renewal shall be made to the Commission by the lessee(s) pursuant to section 303(1) of the Act and the regulations,” it was stated.
According to the NUPRC, in the case of renewal of an oil mining lease, pursuant to Sections 303 (1) and 93 of the Petroleum Industry Act, the application shall be made at least 12 months before the expiration of the oil mining lease. This means that any company that wants its licence renewed ought to have applied for that since June last year.
The law provides for an optional extension of three or five years, depending on the terrain. However, the extension will depend on the company’s performance.
The Federal Government recently vowed to revoke all dormant oil assets.
The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, said the ‘drill or drop’ policy will be implemented, saying the government will take over all idle oil wells from operators holding on to them.
The government also threatened to revoke all licences given to individuals and companies that have refused to start oil exploration.
“One of the things we want to do to ramp up production is to see that any well that is idle has to be allocated to people. The PIA gives the opportunity that any well that hasn’t been used in the past few years could be farmed out and given to people who have proven capacity to do exploration so that we can boost production.
“I am engaging stakeholders, the IOCs, the Nigerian National Petroleum Company Limited to say, ‘Look, if you have a multiplicity of oil wells and you are not using them, we will apply the law’.
“One of the reasons why our production is low is because we have too many shut wells, some of them contiguous to our marginal fields or oil wells. But by the time we take those wells in line with the law and give them to people, and we give a timeline upon which you must produce, we will be able to increase production,” Lokpobiri said.