The Nigerian federal government is set to enforce the ‘drill or drop’ clause within the Petroleum Industry Act (PIA), compelling oil operators to either begin production within three years or relinquish their oil fields to the government.
In line with this, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has initiated a stakeholder engagement focused on the application of Section 94 of the PIA, 2021, which governs this process.
According to Section 94 of the PIA, any marginal field that has not begun production within three years of its effective date must present a field development plan or face relinquishment. The provision also allows the field operator to farm out the discovery with the Commission’s consent, subject to certain conditions, including the submission of a development plan.
Failure to meet these requirements within the designated timeframe will necessitate the relinquishment of the field.
During the session, chaired by NUPRC Chief Executive Gbenga Komolafe, the Commission emphasized the need for efficient management of concessions to maximize oil production and ensure the development of Nigeria’s hydrocarbon reserves. Komolafe, represented by Executive Commissioner for Exploration and Acreage Management, Bashari Indabawa, also discussed strategies to attract investments through effective bid rounds and resource optimization.
The session included an in-depth look at the Commission’s roles and the impact of Section 94 of the PIA, which mandates the relinquishment of marginal fields or discoveries left undeveloped for over three years. Stakeholders were briefed on the implications of these provisions for enhancing growth, transparency, and sustainability in the oil sector.
In another development, Lagos State Commissioner for Energy, Biodun Ogunleye, urged the NUPRC to help secure favorable gas pricing and reliable gas supply for power generation in the state. He emphasized Lagos’s commitment to boosting national power capacity amid growing demand for electricity. Komolafe assured that a team would be set up to collaborate with Lagos State on the matter.
Meanwhile, oil prices rose on Wednesday, driven by concerns over the potential impact of the escalating Russia-Ukraine conflict on oil supplies, despite rising U.S. crude stocks. Brent crude for January rose by 0.7% to $73.80 per barrel, while U.S. West Texas Intermediate crude climbed 1% to $70.10 per barrel. The ongoing conflict has provided support for oil prices this week, as tensions between Russia and Ukraine continue to disrupt global supply dynamics.
