FG threatens to revoke oil block licenses over inactivity

• Published On: 22 August 2024 at 18:53

The Federal Government has issued a stern warning to companies and individuals with oil block licenses who have failed to secure investment or begin exploration, stating that if they do not take action, their licenses will be revoked.

Heineken Lokpobiri, the State Minister of Oil, issued this warning on Wednesday in Abuja, addressing ongoing challenges in the oil and gas sector.

Lokpobiri stated that only 10 of the 60 licenses awarded in the recent oil block bidding were able to attract investment and begin exploration activities. He criticised the practice of holding licenses without the intention or ability to develop them, calling it ineffective and wasteful of resources.

"I have always said that if the upstream sector fails, the midstream and downstream sectors will also suffer," she stated. "We have individuals and companies treating these licenses as mere souvenirs, failing to secure the funds required for exploration. If they are unable to use these licenses to extract oil, we should consider revoking them and transferring them to those who can."

Lokpobiri emphasised that, despite paying signature bonuses to the government, some licence holders lack the financial resources or commitment to conduct actual exploration. He questioned the importance of maintaining licenses with entities that do not benefit the industry or the country.

In related news, the Nigerian Upstream Petroleum Regulatory Commission announced in May the start of the 2024 oil block licensing round. The Commission's goal is to improve the exploitation of Nigeria's substantial crude oil and natural gas reserves, which are estimated at 37.5 billion barrels and 209.26 trillion cubic feet, respectively.

Nigeria, a member of the Organisation of Petroleum Exporting Countries, is attempting to attract more investment to reverse a decade-long decline in oil production from around 2 million barrels per day to just over 1.4 million barrels per day today. The country is also working to make its oil block licensing process more appealing in order to compete with African rivals such as Angola and Namibia.

Oil majors are increasingly shifting away from onshore fields, which are vulnerable to sabotage and spill claims, and towards more stable deepwater fields.