The Nigerian government has issued a stern warning to oil companies holding undeveloped oil blocks, threatening to revoke their licenses if they fail to accelerate production. The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, made the announcement during a high-level industry meeting in Florence, Italy, organized by international oil companies (IOCs) operating in Nigeria.
The move comes as the federal government pushes to ramp up crude output to meet its 2025 target of 2.06 million barrels per day (bpd). Current production stands at 1.67 million barrels per day, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
Lokpobiri emphasized that the government will enforce the “drill or drop” clause in the Petroleum Industry Act (PIA), reclaiming idle oil blocks from firms that have left them undeveloped for decades.
We cannot continue to have assets sitting idle for 20 to 30 years without development, the minister stated. If you are not utilizing an asset, it adds no value—neither to your books nor to Nigeria. We encourage collaboration through farm-outs and shared infrastructure, but if companies remain inactive, we will reallocate these blocks to those ready to invest.
The minister urged IOCs to boost investments, particularly in deep water projects, noting that the government has already implemented investor-friendly policies, including a recent presidential executive order incentivizing deep water exploration.
Lokpobiri said the ball is now in the IOCs’ court. EPC contractors will only commit when they see strong investment decisions from operators. We need strategic moves to drive production and sustain the sector.
He also highlighted the need for increased crude supply to support Nigeria’s expanding refinery capacity, including the Dangote Refinery and upcoming modular refineries.
The Oil Producers Trade Section (OPTS), represented by Chairman Mr. Osagie Osunbor, commended the government’s engagement and acknowledged the need for operators to step up efforts.
We appreciate the government’s commitment to improving the investment climate, Osunbor said. The minister’s direct engagement has challenged us to increase production.
Meanwhile, a Bloomberg report reveals that Nigeria recorded the most significant production cut among OPEC members in March, reducing output by 50,000 bpd to maintain its quota of 1.5 million bpd. The decline follows operational disruptions, including an explosion at the Trans-Niger Pipeline, which has repeatedly hampered crude exports.
OPEC’s overall output dropped by 110,000 bpd in March, with Iraq making the second-largest cut. However, the UAE increased production, exceeding its quota.
As OPEC considers gradual supply increases to stabilize global prices, Nigeria faces mounting pressure to resolve infrastructure bottlenecks and meet its production targets. The federal government’s latest ultimatum signals a tougher stance on underperforming oil assets as it seeks to maximize revenue from the sector.
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