The Nigerian Upstream Petroleum Regulatory Commission has intensified efforts to enforce its controversial “drill or drop” policy, warning oil companies they must begin production immediately or forfeit their licenses in a sweeping crackdown on idle oil assets.
Chief Executive Gbenga Komolafe delivered the ultimatum during a high-stakes meeting with the Independent Petroleum Producers Group at NUPRC headquarters in Abuja, marking a significant escalation in the government’s efforts to revitalize Nigeria’s underperforming oil sector.
The policy requires oil and gas producers to “either begin production within a specified timeframe or relinquish their licenses” and “aims to revitalize the oil sector, ensure optimal use of assets, and boost government revenue,” according to the commission’s statement.
The timing of this enforcement appears critical. By the end of June 2025, A.A. Rano, Northwest Petroleum, Ardova Plc, and 37 other operators will lose their petroleum exploration or mining licenses if they fail to meet production requirements, highlighting the immediate stakes facing dozens of Nigerian oil companies.
Minister of State for Petroleum Resources Heineken Lokpobiri has previously championed this hardline approach, repeatedly promising to seize idle oil wells from operators who fail to develop them. The policy stems from provisions in Nigeria’s Petroleum Industry Act, which gives operators three years to commence production or surrender their assets to the federal government.
The enforcement comes as Nigeria struggles to meet ambitious production targets. The NUPRC has set a production target of at least 2.1 million barrels of oil per day by 2025, while current daily production recently reached 1.78 million barrels per day, up from a baseline of 1.46 million barrels per day in October 2024.
The meeting with the Independent Petroleum Producers Group revealed broader industry dynamics at play. Led by Chairman Abdulrazaq Isa, who also heads indigenous oil company Waltersmith Group, the delegation expressed appreciation for NUPRC’s role in facilitating recent asset divestments by international oil companies to local operators.
These divestments represent a fundamental shift in Nigeria’s energy landscape, transferring significant upstream assets from international majors to indigenous companies. The IPPG has pledged support for the commission’s “Project One Million Barrels Incremental” initiative, designed to boost daily crude production substantially.
During the session, Komolafe highlighted the regulatory improvements implemented since the enactment of the Petroleum Industry Act, including automated licensing processes that have reduced bureaucratic delays and improved operational efficiency across the sector.
However, the “drill or drop” policy faces significant challenges. Nigeria’s oil sector has been plagued by security issues, infrastructure decay, and massive oil theft, which have historically deterred investment and production. Recent government crackdowns on oil theft have shown some success, but the sector remains vulnerable to disruption.
The policy’s success will largely depend on whether operators can overcome these systemic challenges within the specified timeframes. For indigenous companies acquiring divested assets, the pressure is particularly intense as they must demonstrate their ability to develop these resources efficiently while competing with more established international players.
As Nigeria seeks to maximize revenue from its oil resources amid global energy transitions, the “drill or drop” enforcement represents a calculated gamble that tougher oversight will unlock dormant production capacity.
The coming months will reveal whether this aggressive approach can deliver the production increases the country desperately needs to meet its ambitious targets and boost government revenues.
WHAT YOU SHOULD KNOW
Nigeria is aggressively enforcing its “drill or drop” policy, giving oil companies a stark choice: start producing immediately or lose their licenses. With over 40 operators facing potential license forfeiture by June 2025, this represents the most significant crackdown on idle oil assets in the country’s history.
Nigeria needs to boost daily production from 1.78 million to 2.1 million barrels to meet revenue targets while simultaneously transferring control from international oil companies to local operators.
This policy will determine whether indigenous Nigerian companies can successfully develop the nation’s oil resources or if the government will need to reassign assets to more capable operators.
