Oil wells’ licensees that have failed to initiate drilling operations in the last 30 years risk losing such licenses.

They will as well lose ownership of the facilities under the “drill or drop” provisions of the Petroleum Industry Act (PIA) 2021.

The Minister of State for Petroleum Resources (Oil) Senator Heineken Lokpobiri, made this known while speaking at the Cross Industry Group (CIG) Meeting held in Florence, Italy, organised by international oil companies (IOCs) operating in Nigeria. He said any proactive government will revoke the licenses for undeveloped assets and reallocate them to those willing and ready to drill them.

He urged industry players to explore collaborative measures such as shared resources for contiguous assets, farm-outs, and the release of underutilised assets to operators ready to invest in production.

According to his spokesman Nneamaka Okafor, the minister added that the decision to enforce the “drill or drop” in the PIA 2021, is in line with the Federal Government’s drive to boost production.

 “We cannot continue to have assets sitting idle for 20 to 30 years without development. If you are not utilising 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 underutilised 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 said.

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 urged IOCs operating in Nigeria to ramp up investments in the country’s oil and gas sector, emphasising that the administration of President Bola Tinubu had provided every necessary incentive to ensure seamless and profitable operations.

Lokpobiri noted 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 incentivising 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,” the Minister stated.

He further emphasised 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.

To make this easy and possible, he stressed that ramping up production will enable Nigeria to meet both local and international obligations.

The Chairman of the Oil Producers Trade Section (OPTS), 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,” Osunbor stated.

The Federal Government, he said, remains committed to ensuring a thriving oil and gas industry and expects operators to match its commitment by making tangible investment decisions that will drive growth, sustainability, and national energy security.

[TheNation]