Latest data from the Nigerian Upstream Petroleum and Regulatory Commission (NUPRC) showed that over 60% of the prospecting licenses issued to local and foreign oil firms had expired, at a time when the country is seeking new investment to boost production.
The Nigerian government issued 53 exploration leases, some dating back to 2003, to oil companies but 33 have since expired and not renewed, including four which are bogged down by contract disputes. The leases have not been automatically revoked, but the regulator is no longer willing to let the companies hold on to leases indefinitely.
Nigeria, Africa's biggest oil producer, has seen a decline in oil production due to crude theft, pipeline vandalism and lack of new investment in the sector.
"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," Gbenga Komolafe, CEO of NUPRC, told Reuters.
Some of the expired leases belong to listed energy firm Oando and the exploration unit of TotalEnergies, all in the Niger Delta.
Nigeria enacted an oil industry reform law in 2021, which empowered the regulator to review the technical and financial capabilities of companies holding oil exploration leases.
Komolafe said the commission will initiate reviews of these leases and awards of new leases would be "subject to specific terms and conditions."
Investments in oil exploration in Nigeria have been few and far between as oil majors exit onshore and shallow water assets due to rising insecurity and sabotage of oil infrastructure and legal disputes with communities in the Niger Delta.
(Reporting by Isaac Anyaogu, Editing by MacDonald Dzirutwe and Grant McCool)
By Isaac Anyaogu
