According to the Nigerian Upstream Petroleum and Regulatory Commission, the Federal Government intends to cancel oil exploration leases that have been awarded to businesses but on which they have not been able to conduct any exploration work.

Gbenga Komolafe, the chief executive officer of the Nigerian Upstream Petroleum Regulatory Commission, informed Reuters on Monday that only businesses possessing a strong technical and financial foundation would be permitted to maintain their leases.

“Based on PIA (Petroleum Industry Act), the commission is focused on delivering value for the nation so only firms that are technically and financially viable will keep their leases,” Komolafe said.

Komolafe said the commission would initiate reviews of these leases and awards of new leases would be “subject to specific terms and conditions.”

According to latest data from the NUPRC, although about 53 exploration leases were issued from 2003 till date; over 60 per cent of the prospecting licenses issued to local and foreign oil firms had expired.

Out of the 53 licences, 33 have since expired and not renewed, including four which are held down by contract disputes. The leases have not been automatically revoked, but the regulator is no longer willing to let the companies hold on to leases indefinitely.

The PIA enacted in 2021 empowered the regulator to review the technical and financial capabilities of companies holding oil exploration leases.

Investments in oil exploration in the country have been few and far between as oil majors exit onshore and shallow water assets due to rising insecurity and sabotage of oil infrastructure and legal disputes with communities in the Niger Delta.

The sector has since been bogged down by low investments in exploration activities, coupled with low crude oil production as a result of theft from pipeline vandalism.