The Federal Government has declared an end to the practice of oil and gas companies holding petroleum assets without developing them, warning that operators must either invest in production or risk losing their licences.
The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, said the government was enforcing the drill-or-drop provisions of the Petroleum Industry Act (PIA) to ensure that unused oil and gas assets are recovered and transferred to investors willing and capable of developing them.
Lokpobiri made the remarks in an interview published in Upstream Gaze, a special edition of a quarterly magazine produced by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to mark its fifth anniversary.
He explained that the policy had strengthened the authority of the NUPRC to recover undeveloped petroleum assets and make them available for fresh investment.
According to him, the government had recently offered 50 petroleum assets for bidding, with another licensing round expected.
The minister said the drill-or-drop policy was designed to discourage speculative ownership of oil blocks, accelerate exploration, attract investment and increase Nigeria’s crude oil and gas production.
He stressed that companies could no longer retain petroleum assets merely as symbols of wealth without making efforts to develop them.
Lokpobiri said some operators had already begun voluntarily relinquishing assets because they preferred to surrender them rather than face regulatory action. Others, he added, were reviewing their portfolios to determine which assets remained commercially viable.
Active drilling rigs increase to over 60
The minister also attributed the increase in active drilling rigs to reforms and improved regulatory activities in the oil and gas sector.
He disclosed that the number of active rigs had risen from between 10 and 14 in 2023 to more than 60 currently.
However, Lokpobiri identified the departure of major Engineering, Procurement and Construction (EPC) contractors, deep-offshore contractors and other service providers as a major challenge facing the industry.
He explained that prolonged uncertainty before the passage of the Petroleum Industry Act reduced project activities and forced some contractors to leave Nigeria.
According to him, the reduced number of service providers weakened competition and contributed to higher project costs.
Lokpobiri noted that contractors needed a steady pipeline of projects to sustain their operations, warning that insufficient activities would continue to discourage companies from operating in the country.
He said the government was engaging contractors in Europe and the United States to encourage their return while implementing fiscal, operational and regulatory reforms to improve Nigeria’s competitiveness.
The minister added that a recent presidential executive order was expected to unlock nearly $50 billion in deep-offshore investments.
He also pointed to the reactivation of previously shut-in wells following recent divestments as evidence of efforts to improve production.
Among the developments he cited were Seplat Energy’s acquisition of ExxonMobil’s assets and Renaissance Africa Energy’s acquisition of Shell’s onshore assets.
Lokpobiri expressed optimism that Nigeria could significantly increase crude oil production over the next five years if investment commitments and development plans were implemented, projecting a potential output of between three million and five million barrels per day.
Kachikwu blames government interference for delays
Former Minister of State for Petroleum Resources and former Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Professor Ibe Kachikwu, also highlighted challenges that affected investment and decision-making during his time in government.
Kachikwu said excessive government interference and lengthy approval processes made it difficult for the national oil company to take timely decisions, even when the commercial benefits were clear.
He explained that the lack of managerial independence restricted innovation and prevented the organisation from operating with the flexibility required to compete effectively in the industry.
According to him, he attempted to introduce a stronger private-sector approach into the NNPC and the petroleum ministry but faced difficulties because the system was accustomed to extensive government control.
Kachikwu said the old Petroleum Act lacked clearly defined institutional responsibilities, leaving several investment decisions dependent on the discretion and initiative of individual officeholders.
He acknowledged that the Petroleum Industry Act had introduced clearer responsibilities and greater institutional independence but expressed concern that significant government control remained.
The former NNPC chief also argued that the level of investment recorded since the PIA was enacted had not met expectations.
He said much of the activity had involved acquisitions, mergers and takeovers of existing assets rather than the development of major new production platforms and floating production facilities.
Kachikwu maintained that Nigeria should aim higher than the Federal Government’s target of three million barrels of crude oil per day.
He said the country had the potential to produce four million barrels daily by 2030, warning that global changes in the energy industry meant Nigeria could not afford to delay investment.
According to him, the growth of electric vehicles, solar energy and other alternative energy sources, alongside the emergence of new oil-producing countries, makes it necessary for Nigeria to accelerate production.
He called for clear investment plans, improved infrastructure, predictable fiscal policies, transparency and faster government decisions to attract the capital required to achieve higher output.
Nigeria targets 10 billion cubic feet of gas daily by 2027
In the gas sector, the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, said Nigeria must translate its estimated 215 trillion cubic feet of proven gas reserves into increased domestic supply, industrial development and economic growth.
Ekpo said the government was targeting gas production of 10 billion standard cubic feet per day by 2027 and 12 billion standard cubic feet daily by 2030.
He explained that achieving the targets would require faster development of non-associated gas resources, alongside sustained investment in processing facilities and pipeline infrastructure.
The minister said increased gas production should support electricity generation, fertiliser production, petrochemicals, manufacturing, liquefied petroleum gas (LPG), compressed natural gas (CNG) and other industrial activities.
He added that Nigeria also needed to strengthen regional gas supply projects and maintain its liquefied natural gas exports.
On the CNG initiative, introduced to provide a cheaper alternative to petrol-powered transportation following the removal of the petrol subsidy, Ekpo said the planned network of refuelling stations was being expanded from 500 to 1,000.
He disclosed that more than $2 billion had been mobilised for the CNG ecosystem since 2023.
The investment, he said, had supported the conversion of 120,000 vehicles, the establishment of more than 400 certified conversion centres and the operation of over 90 refuelling stations.
Ekpo stressed that the government wanted to extend access to CNG beyond major cities and ensure that the initiative translated into lower transportation costs for Nigerians.
NEITI commends NUPRC on licensing transparency
The Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Musa Adar, commended the NUPRC for improvements in licensing procedures, disclosure requirements and regulatory oversight in the upstream petroleum sector.
Adar, a former chairman of the House of Representatives Committee on Petroleum Resources (Upstream), said the Petroleum Industry Act had established a clearer regulatory framework after years of concerns about transparency and accountability.
He said the commission had helped improve the licensing process and strengthen oversight of upstream operations.
On the 2025 licensing round monitored by NEITI, Adar said the organisation was awaiting the final report and would not draw conclusions before its completion.
He noted, however, that preliminary feedback from field officers had not identified any significant misalignment in the process.
Adar called for further improvements in transparency, accountability and regulatory responsiveness, adding that investors needed a system that was fair, predictable and transparent.
He also urged Nigeria to expand its focus beyond crude oil production by investing more in domestic refining and petrochemical processing.
According to him, retaining more value within the Nigerian economy would help reduce the country’s dependence on imported refined petroleum products.
Olu of Warri says PIA has improved relations with oil communities
The Olu of Warri, Ogiame Atuwatse III, said the Petroleum Industry Act had improved relations between oil-producing communities and petroleum operators by giving host communities a clearer stake in oil and gas activities.
He attributed the development to the establishment of Host Communities Development Trusts (HCDTs), which provide a framework for funding community development projects.
According to the monarch, the law has helped communities better understand their entitlements and responsibilities while encouraging a greater sense of ownership of petroleum infrastructure.
He said the framework had brought greater clarity to the obligations of oil companies and helped communities identify their development priorities.
However, he noted that official data would be required to establish the extent to which the arrangement had reduced pipeline vandalism and other forms of sabotage.
Under the Petroleum Industry Act, oil companies are required to contribute three per cent of their actual operating expenditure from the preceding financial year to the applicable Host Communities Development Trust.
The monarch said the provision had given communities a clearer understanding of the resources available for development and created a more structured relationship between host communities and operators.
The various stakeholders made their remarks while assessing the impact of the Petroleum Industry Act and the reforms introduced in Nigeria’s oil and gas industry.
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