The Nigerian Upstream Petroleum Regulatory Commission announced that oil companies can no longer hold exploration licenses for many years without developing the assets. New provisions under the Petroleum Industry Act now require operators to either develop their fields or return the licenses.
The Commission Chief Executive of the NUPRC, Oritsemeyiwa Eyesan, shared this message while hosting a delegation from the Petroleum Directorate of Sierra Leone at the commission’s headquarters in Abuja.
Eyesan also said she was pleased with the level of investor interest in Nigeria’s 2025 oil licensing round. She described the number of applicants as encouraging even though the regulator introduced stricter bidding rules.
According to Eyesan, the investor response to the licensing round shows renewed confidence in Nigeria’s upstream petroleum sector following reforms introduced by the Petroleum Industry Act.
She explained that the ongoing exercise offers 50 oil blocks. She added that participation remained strong even though the regulator limited companies to bidding for a maximum of two blocks, either alone or in a consortium.
“For the 2025 licensing round, we have 50 oil blocks on offer. And the outcome of the prequalification submission showed that there is strong interest in the bid round,” Eyesan said.
She said the commission intentionally limited the number of blocks each company could bid for. The goal was to stop asset hoarding and allow more investors to participate.
She added that this policy ensures the government allocates exploration assets to companies that are prepared to invest and develop them. Eyesan also said the commission introduced additional measures to strengthen transparency and investor confidence in the process.
She noted that the regulator hired an independent audit firm to review the digital bidding platform and confirm that the system works properly.
“In order to ensure full transparency in the licensing round, the commission partnered with a reputable audit firm to examine the system and confirm that it is reliable. We will publish the outcome of that review to strengthen investor confidence,” she said.
Eyesan said the introduction of the drill or drop rule under Section 94 of the Petroleum Industry Act has changed how Nigeria manages exploration licenses.
She explained that the provision requires operators to begin exploration and development within a specified period or give up the license to the government.
She said the reform has ended the longstanding practice where companies held oil blocks for decades without developing them.
Eyesan said, “One of the advantages of the PIA is Section 94, which requires operators to either start work or relinquish the license. We call this the “drill or drop” provision.
“The PIA also created opportunities for both small and large companies because the act now includes the drill or drop rule. This has removed many uncertainties.”
She explained that before the reform, some companies kept prospecting licenses for up to 20 years without carrying out significant exploration activities. This slowed Nigeria’s efforts to increase its petroleum reserves.
“In the past, some operators held licenses for 20 years and did nothing with the blocks.
“Now we have moved to the drill or drop system. This means more assets have returned to the government, which has encouraged us to consider organizing licensing rounds more frequently, possibly every year,” the CCE said.
She added that the new policy has returned several dormant assets to the government’s portfolio and created fresh opportunities for investors in the current licensing round.
The commission also believes the strong interest in the bid round could help Nigeria increase its proven crude oil reserves and maintain long-term upstream investment.
Nigeria holds some of the largest hydrocarbon reserves in Africa. However, exploration activity has slowed in recent years due to regulatory uncertainty, security challenges, and pressure from the global energy transition.
The government passed the Petroleum Industry Act in 2021 to address these issues. The law introduced clearer fiscal terms, improved regulatory structures, and stronger accountability for operators, which has helped restore investor confidence.
Meanwhile, the director general of the Petroleum Directorate of Sierra Leone, Foday Mansaray, said his country hopes to learn from Nigeria’s regulatory experience as it develops its own hydrocarbon sector.
Mansaray explained that the delegation visited the NUPRC to strengthen bilateral cooperation and gain insights into Nigeria’s petroleum governance system.
“We came to collaborate with the NUPRC at a bilateral level and learn from Nigeria, our big brothers in the industry,” he said. “We are a small country of about eight million people, but we are ambitious and believe we can learn a lot from Nigeria’s experience in managing the petroleum sector.”
He also called for stronger energy cooperation between both countries and proposed signing a Memorandum of Understanding to formalize collaboration in regulatory capacity building and petroleum sector development.
Nigeria launched the 2025 oil licensing round in December 2025 after receiving approval from Bola Tinubu. The initiative aims to attract new investment into the country’s upstream petroleum sector.
The bid round includes 50 oil and gas blocks across several sedimentary basins such as the Niger Delta, Anambra Basin, Bida Basin, Benue Trough, and Chad Basin. The government aims to boost exploration activity, expand reserves, and support long-term crude production growth.
The process has already completed the prequalification stage. Companies submitted applications before the February 27, 2026 deadline, after which qualified bidders will move to the technical and commercial bidding phase, where regulators will evaluate proposals before announcing final awards.
The entire licensing round will run for about eight months from November 2025 to July 2026. The process will conclude with the commercial bid conference and final approvals before the government announces the winning bidders.
source: punchng.com
African Energy Council