The Federal Government has issued a stern warning to companies and individuals holding oil block licenses who have failed to secure investment or commence exploration, stating that their licenses will be revoked if they do not take action.
State Minister of Oil, Heineken Lokpobiri, delivered this warning in a statement on Wednesday in Abuja, addressing ongoing challenges in the oil and gas sector.
Lokpobiri highlighted that of the 60 licenses awarded in the recent oil block bidding, only 10 companies have managed to attract investment and initiate exploration activities. He criticized the practice of holding licenses without the intent or ability to develop them, calling it ineffective and a waste of resources.
“I have always said that if the upstream sector fails, the midstream and downstream sectors will also suffer,” Lokpobiri said. “We have individuals and companies treating these licenses as mere souvenirs, failing to secure the necessary funds for exploration. If they cannot make use of these licenses to extract oil, we should consider revoking them and reallocating them to those who can.”
Lokpobiri emphasized that some license holders, despite paying signature bonuses to the government, lack the financial means or commitment to actual exploration. He questioned the value of maintaining licenses with entities that do not contribute positively to the industry or the country.
In related news, the Nigerian Upstream Petroleum Regulatory Commission announced in May the commencement of the 2024 oil block licensing round. The Commission aims to enhance the exploitation of Nigeria’s substantial crude oil and natural gas reserves, estimated at 37.5 billion barrels and 209.26 trillion cubic feet, respectively.
Nigeria, a member of the Organization of the Petroleum Exporting Countries, is striving to attract more investment to reverse a decline in oil production from around 2 million barrels per day a decade ago to just over 1.4 million barrels per day today. The country is also seeking to improve the attractiveness of its oil block licensing process to compete with African rivals such as Angola and Namibia.
Oil majors are increasingly moving away from onshore fields, which are vulnerable to sabotage and spill claims, to focus on more stable deepwater fields.
