…Licence Extensions May Be Refused, Securities Enforced
The Nigerian Upstream Petroleum Regulatory Commission has moved to enforce the “Drill-or-Drop” provisions of the Petroleum Industry Act 2021, warning holders of dormant or underperforming oil and gas licences that they could lose their acreages if they fail to fulfil their approved work obligations.
The commission directed affected operators to disclose their compliance status, explain the obstacles delaying their operations and submit revised implementation plans no later than October 31, 2026.
The directive affects non-performing acreages awarded under the 2020 Marginal Field Bid Round, the 2022/2023 Mini Bid Round and the 2024 Licensing Round.
The warning was contained in a circular signed by the Commission Chief Executive of the NUPRC, Oritsemeyiwa Eyesan, dated September 14, 2026, with reference number NUPRC/1127/Vol.13/55.
The commission said the enforcement exercise formed part of efforts to increase Nigeria’s oil and gas production by ensuring that licensed acreages are actively explored and developed rather than retained indefinitely without performance.
According to the regulator, the PIA operates on the principle that petroleum acreage is granted to be worked and must return to the Federal Government where the licensee fails to develop it within the prescribed term.
The commission anchored its position on Sections 77, 78 and 88 of the PIA, together with the default and revocation provisions contained in Sections 96 and 97.
It warned that enforcement measures could include the refusal of licence-extension applications, compulsory relinquishment of affected acreages, enforcement of work-performance securities and the commencement of formal revocation proceedings.
The circular explained that a Petroleum Prospecting Licence granted under Section 77 of the PIA is issued for a defined initial exploration period, with any extension dependent on the terrain and the licensee’s fulfilment of the applicable work commitments.
It added that the obligations contained in each licence, including the General Licence Conditions, Concession Contract, Minimum Work Programme and Work Performance Security, must be read together and performed within the prescribed period.
According to the NUPRC, a licensee’s continued entitlement to hold an acreage depends on the performance of those obligations within the term of the licence.
The commission, however, clarified that the immediate purpose of the exercise was to stimulate production and not merely to seize licences.
“The Commission’s objective is to increase production, not forfeiture,” the circular stated.
The NUPRC acknowledged that some operators could be experiencing challenges relating to financing, rig availability, insecurity, host-community engagement, infrastructure, regulatory approvals and disputes among business partners.
Affected licensees were consequently directed to submit details of their level of compliance with licence obligations, including the execution of approved work programmes, the specific constraints affecting performance, proposed solutions and revised implementation timelines.
The information must be submitted to the commission on or before October 31, 2026.
The regulator warned that its willingness to engage affected operators or facilitate possible solutions would not automatically extend the duration of their licences or excuse the performance of contractual obligations.
“The Commission will not assume jurisdiction beyond its statutory mandate, displace any agreed dispute-resolution mechanism or the jurisdiction of the courts, or permit engagement with the Commission to suspend the term of a licence or excuse the performance of any obligation,” it stated.
The NUPRC also warned that disputes among partners would not protect operators from regulatory sanctions, stressing that “internal disagreement will not excuse failure to meet licence obligations.”
At least 62 successful awardees were identified across the three licensing exercises, although the October 31 directive applies specifically to operators whose acreages are not meeting their approved work commitments.
Under the 2020 Marginal Field Bid Round, 50 Petroleum Prospecting Licences were issued to successful awardees. The commission projected that the fields could produce about 58,000 barrels of oil and 87 million standard cubic feet of gas daily.
The 2022 Mini Bid Round initially involved seven deep-offshore Petroleum Prospecting Licences and was intended to attract new investors to Nigeria’s upstream petroleum sector.
In July 2026, the commission disclosed that 12 successful awardees had received 19 Petroleum Prospecting Licences from the 2022/2023 Mini Bid Round and the 2024 Licensing Round, covering deep-offshore, shallow-water and continental-shelf acreages.
The latest enforcement action places the affected companies on notice that obtaining an acreage does not confer an indefinite right to retain it without exploration or development.
The NUPRC directed all affected licensees to submit the required information within the stipulated period, adding that enquiries should be addressed to its Executive Commissioner for Exploration and Acreage Management, Bashari Indabawa.
