40 Nigerian Oil Companies Face Licence Expiry Risk in June 2025 Without Renewal

• At least 40 oil licences set to expire in June 2025 risk non-renewal unless the Minister of Petroleum acts in line with the Petroleum Industry Act
• These licences, mostly for marginal fields awarded in the 2020 bid round, may receive a three- or five-year extension depending on company performance.
• The Nigerian Upstream Petroleum Regulatory Commission is currently engaging with license holders to decide on contract renewals

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

Unless the Minister of Petroleum renews their licences in compliance with the Petroleum Industry Act, at least 40 business oil licences that are due to expire in June 2025 risk being lost.

The various licences granted to different businesses on 28 June 2022 will expire on 27 June 2025, according to the Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC) Upstream Concession Situation Report published in May.

These include petroleum exploration permits issued to oil corporations following the completion of the 2020 marginal fields bid round. According to the NUPRC, the law allows for an optional extension of three or five years; however, the length of the extension will depend on the company’s performance.

Smaller oil blocks that have been developed but have not produced for more than ten years are known as marginal fields.

To give Nigerian indigenous oil and gas companies the opportunity to take a more active role in exploration and production by owning and managing oil blocks, the Federal Government launched the marginal field programme in the 1990s.

The 57 marginal oil fields offered for lease at that time had successful bidders in the 2020 marginal bid round.

Some of the companies that emerged as winners included Matrix Energy, AA Rano, Ardova Plc, Duport Midstream, Genesis Technical, Twin Summit, Bono Energy, Deep Offshore Integrated, Odu’a Oil, MRS, and Petrogas.

Others were North Oils and Gas, Pierport, Metropole, Pioneer Global, Shepherd Hill, Akata, NIPCO, Aida, YY Connect, Accord Oil, Pathway Oil, Tempo Oil, and Virgin Forest, among others.

NUPRC data indicated that EOP Energy’s licence to operate the Emohua field of OML 22 will expire next month. EOP Energy is made up of Erebina Energy Resources Limited, Omega-Butter Marginal Fields Ltd., and Intessa Energy Ltd.

Similarly, the authorisation granted to Ardova Plc and Petrodev to run the Olua field of OML 25 through Ardogreen Energy will also expire on the same day.

In an exclusive interview, Olaide Sonola, the commission’s Corporate Affairs Manager, stated that the outcome of ongoing engagements with these companies will determine whether their contracts are renewed.

This will also relate to the guidelines that the commission is developing, Sonola added.

“The law provides for an optional extension of three or five years, depending on the terrain. The extension will depend on the company’s performance, the result of ongoing engagement, and the guidelines we are working on,” she said.

FG speaks on withdrawing licenses of dormant oil blocks

Legit.ng reported that Senator Heineken Lokpobiri, the State Minister of Petroleum Resources (Oil), threatened to take oil blocks away from owners who haven't developed them.

This comes as the Federal Government of Nigeria has urged foreign oil companies doing business in the country to increase their investment in the oil and gas industry, highlighting the fact that the current administration has offered all the incentives required to guarantee smooth and successful operations.

In keeping with the push to increase oil production, Lokpobiri stated that the government will start putting the Petroleum Industry Act's "drill or drop" provisions into effect in 2025, with the Federal Government aiming to produce 2.06 million barrels per day.

Source: Legit.ng