NUPRC Threatens to Revoke Non-Performing Oil Licences, Sets October 31 Deadline

NUPRC tightens enforcement of oil licence obligations

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has warned holders of non-performing petroleum prospecting licences (PPLs) that they risk losing their acreages if they fail to meet approved work commitments.

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The regulator has given affected operators until October 31, 2026 to disclose the challenges delaying development, state their level of compliance and submit revised plans for fulfilling their obligations.

The directive forms part of NUPRC’s enforcement of the “Drill-or-Drop” provisions of the Petroleum Industry Act (PIA) 2021, which require licensed petroleum acreages to be actively worked rather than held without corresponding exploration and development activity.

NUPRC Targets Non-Performing Acreages

The latest warning covers holders of licences awarded under the 2020 Marginal Field Bid Round, the 2022/2023 Mini Bid Round and the 2024 Licensing Round.

NUPRC said continued ownership of the affected acreages is conditional on licensees meeting the obligations contained in their licence instruments, approved work programmes, minimum work programmes and work performance securities.

Where operators fail to meet those obligations, the commission said possible regulatory measures include refusing licence extensions, requiring relinquishment of acreage, calling in work performance securities and commencing revocation proceedings.

The commission's position is based on the principle that oil and gas acreage is awarded for development rather than passive holding.

October 31 Deadline for Operators

Rather than immediately moving to revoke the affected licences, NUPRC has asked operators facing difficulties to provide detailed information about their circumstances by October 31.

Their submissions are expected to include the level of compliance with approved work programmes, the specific obstacles affecting implementation, proposed measures for addressing those obstacles and revised timelines for completing outstanding obligations.

The commission said it is prepared to facilitate solutions within the limits of its statutory authority.

However, engagement with NUPRC will not suspend the term of a licence or remove an operator's contractual and statutory obligations.

Financing and Infrastructure Among Challenges

NUPRC acknowledged that some operators may be facing genuine challenges in progressing their oil and gas projects.

The commission identified financing, availability of drilling rigs, security, host-community engagement, infrastructure, regulatory approvals and disagreements between partners among the issues that could delay development.

This is particularly relevant for smaller operators and companies holding newer licences, where the cost of exploration and field development can be significant before commercial production begins.

The regulator has indicated that it is willing to engage with operators on such issues, but will not use those discussions to extend licence terms or excuse non-compliance.

Recent Bid Rounds Under Review

The licences affected by the directive emerged from three recent licensing exercises designed to attract new investment into Nigeria's upstream petroleum sector.

Under the 2020 Marginal Field Bid Round, NUPRC issued 50 Petroleum Prospecting Licences to successful awardees. The commission had projected that the fields could eventually generate about 58,000 barrels of oil per day and 87 million standard cubic feet of gas per day.

The 2022/2023 Mini Bid Round and 2024 Licensing Round subsequently added further acreage to the pool of recently awarded assets.

In July 2026, NUPRC said 12 successful awardees had received 19 PPLs from the 2022/2023 Mini Bid Round and the 2024 Licensing Round, covering deep offshore, shallow-water and continental-shelf acreages.

NUPRC Says Objective Is Production, Not Forfeiture

Despite the threat of regulatory action, NUPRC has stressed that the primary objective is to increase production rather than simply take licences away from operators.

The commission said the enforcement exercise is intended to ensure that awarded acreages are actively explored and developed, thereby supporting additional oil and gas output.

This distinction is important for investors because the October 31 deadline represents an opportunity for affected operators to demonstrate progress or explain the constraints preventing them from meeting their obligations before more severe regulatory measures are considered.

NUPRC's Chief Executive, Oritsemeyiwa Eyesan, has said the commission's objective is “to increase production, not forfeiture.”

Partner Disputes Will Not Excuse Non-Performance

The regulator has also addressed situations in which disagreements between partners contribute to delays.

NUPRC said internal disputes would not excuse failure to meet licence obligations and urged operators to ensure that partnership and financing arrangements adequately address issues such as participating interests, operatorship, cash calls, default, assignment, change of control and dispute resolution.

This places greater importance on the structure of joint-venture and financing arrangements behind upstream projects.

For investors, the directive reinforces the need to assess not only the geological and commercial prospects of an acreage but also the ability of the ownership structure to fund and execute the approved work programme.

Potential Impact on Upstream Investment

The enforcement could influence the allocation of Nigeria's petroleum assets if licences that remain non-performing eventually become available for reallocation or fresh investment.

For the upstream sector, this could create opportunities for operators with the technical and financial capacity to develop assets that existing holders are unable or unwilling to progress.

At the same time, stricter enforcement could increase pressure on current licence holders to mobilise capital, secure contractors and resolve operational constraints within defined timelines.

The approach also signals that winning an oil licence does not by itself guarantee continued control of an acreage indefinitely.

Implications Beyond the Oil Sector

The potential development of currently underperforming oil and gas acreages could have wider economic implications.

Increased upstream activity can generate demand across engineering, logistics, construction, equipment supply, accommodation and other supporting industries.

For the property sector, activity around producing fields and exploration projects can influence demand for residential accommodation, offices, industrial facilities, logistics property and other real estate supporting energy-sector operations.

The scale and location of any such effect would depend on whether affected licences progress into actual exploration, development and production.

Conclusion

NUPRC's October 31 deadline places non-performing oil licence holders under greater pressure to demonstrate compliance with their statutory work commitments.

The regulator has warned that failure to address outstanding obligations could result in measures including relinquishment, the calling in of work performance securities and revocation proceedings. At the same time, it has acknowledged challenges involving financing, infrastructure, security, drilling capacity, host communities and partner arrangements.

The immediate focus will therefore be on whether affected operators can demonstrate credible progress and revised implementation plans before the deadline.

For Nigeria's upstream sector, the enforcement drive could determine whether recently awarded petroleum acreages translate into active exploration and production, additional investment and ultimately greater utilisation of the country's oil and gas resources.

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