FG Moves to Revoke Dormant Oil Blocks, Targets $50bn Investment and Higher Crude Production
FG Moves to Revoke Dormant Oil Blocks, Targets $50bn Investment and Higher Crude Production
The Federal Government has intensified efforts to end the prolonged underdevelopment of Nigeria’s oil and gas resources, warning petroleum companies that licences for dormant oil blocks could be withdrawn and reassigned to serious investors capable of bringing the assets into production.
Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, disclosed that the government would strictly enforce the drill-or-drop provisions of the Petroleum Industry Act (PIA), which empower regulators to recover petroleum assets from operators who fail to develop them within the legally stipulated period.
According to the minister, the new regulatory approach is designed to discourage speculative ownership of oil blocks, eliminate the practice of retaining valuable petroleum licences without meaningful investment and create opportunities for companies prepared to undertake exploration and production activities. He revealed that 50 petroleum assets had recently been offered for bidding, with another licensing round being planned.
Lokpobiri explained that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has the legal authority to recover undeveloped assets and reallocate them to qualified investors. He noted that some operators were already considering voluntarily surrendering licences rather than facing regulatory recovery, while others were reviewing their investment portfolios to determine which assets they could realistically develop.
The minister further revealed that ongoing reforms had contributed to a significant improvement in drilling activities across Nigeria’s petroleum industry. According to him, the number of active drilling rigs has increased from approximately 10 to 14 in 2023 to more than 60, reflecting renewed investment interest and improved regulatory engagement.
Beyond recovering dormant oil blocks, the Federal Government is pursuing measures aimed at attracting nearly $50 billion in deep-offshore investments through fiscal incentives, regulatory reforms and a recent presidential executive order. Lokpobiri expressed optimism that sustained investment and the development of existing petroleum assets could raise Nigeria’s crude oil production to between three million and five million barrels per day within the next five years, although the projection remains dependent on actual project execution.
He acknowledged that Nigeria’s oil industry continues to face serious challenges, particularly the high cost of executing major petroleum projects following the departure of several international engineering, procurement and construction contractors. The minister explained that years of uncertainty and limited investment opportunities had forced some service providers to leave the country, reducing competition and increasing operational costs. He said the government was engaging contractors in Europe and America to encourage their return.
The minister also identified recent acquisitions involving Seplat Energy and Renaissance Africa Energy as developments capable of strengthening domestic petroleum production. He explained that the reactivation of previously shut-in wells following the acquisition of assets formerly operated by ExxonMobil and Shell could contribute to higher output and improved utilisation of Nigeria’s hydrocarbon resources.
Meanwhile, Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, emphasised the need to transform Nigeria’s estimated 215 trillion cubic feet of proven natural gas reserves into reliable energy supply, industrial development and economic opportunities. He reiterated the government’s targets of producing 10 billion standard cubic feet of gas daily by 2027 and 12 billion by 2030, stressing that achieving these objectives would require substantial investments in gas processing facilities and pipeline infrastructure.
Ekpo also highlighted the expansion of Nigeria’s Compressed Natural Gas (CNG) programme, revealing that more than $2 billion had been attracted into the sector since 2023. According to him, the initiative has supported approximately 120,000 vehicle conversions, more than 400 certified conversion centres and over 90 operational refuelling stations, while the government plans to expand its proposed national refuelling network from 500 to 1,000 stations.
The Federal Government maintained that the success of its petroleum reforms would ultimately be measured by increased crude oil and gas production, stronger investor confidence, improved government revenue and the creation of sustainable economic opportunities. With stricter enforcement of petroleum licensing regulations, Nigeria is seeking to move away from the accumulation of undeveloped oil assets towards a more productive energy industry capable of supporting national development.
