Nigeria’s upstream oil and gas sector has entered a new chapter, with the country’s chief petroleum regulator drawing a firm line under decades of licence hoarding that critics say robbed Africa’s largest oil producer of its full exploration potential.
Oritsemeyiwa Eyesan, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), issued the starkest warning yet to operators sitting on dormant oil blocks, declaring unequivocally that the days of holding prospecting licences without turning a drill bit are over.
“In the past, we had operators who held licences for as long as 20 years and sat on those assets without doing anything,” Eyesan said, addressing a visiting delegation from Sierra Leone’s Petroleum Directorate at the Commission’s Abuja headquarters. “That era is now over.”
For generations, Nigeria’s upstream sector has been plagued by a quiet but costly dysfunction: oil blocks awarded to companies that accumulated acreage as speculative assets, parked them indefinitely, and returned little value to the Nigerian state or its people.
The practice distorted the investment landscape, locked out smaller or more committed players, and left potentially significant reserves unexplored.
The legal instrument now cutting through that inertia is Section 94 of the Petroleum Industry Act (PIA), signed into law in 2021 after years of legislative wrangling. The provision, commonly referred to as the “drill-or-drop” clause, is unambiguous in its intent: operators must either commence meaningful exploration activity within stipulated timeframes or surrender the licence entirely.
Eyesan confirmed that the NUPRC is now enforcing this provision with a rigor that has no precedent in Nigeria’s regulatory history. “The enforcement of Section 94 of the PIA has fundamentally changed the landscape of Nigeria’s upstream sector,” she said, adding that the relinquishment of idle blocks has materially expanded the pool of assets available for redistribution to investors prepared to put them to work.
The practical consequence of the new enforcement regime is already being felt in Nigeria’s ongoing 2025 licensing round, which Eyesan described as generating a level of investor interest she found encouraging.
The round offers 50 oil blocks to prospective operators, but in a deliberate architectural choice designed to prevent a repeat of historical concentration, the guidelines cap each company—whether bidding independently or through a consortium—at a maximum of two blocks.
The restriction, Eyesan explained, is intended to democratize access, broaden participation, and ensure that licence allocations translate into genuine exploration commitments rather than balance-sheet entries.
“The PIA has opened opportunities for both small and big players,” she said, noting that the number of companies that cleared the pre-qualification stage was impressive by any measure, a sign, she suggested, that investors are responding to the clarity and predictability the new regulatory framework provides.
If momentum is sustained, the NUPRC chief indicated the Commission has ambitions to institutionalize the process further, with annual licensing rounds potentially becoming a fixture of Nigeria’s upstream calendar, a standard practice in mature petroleum jurisdictions but one that has historically eluded Africa’s biggest oil economy.
The backdrop to Eyesan’s remarks was a visit from a high-level delegation led by Foday Mansaray, Director-General of Sierra Leone’s Petroleum Directorate. Mansaray said his team made the journey to Abuja specifically to study Nigeria’s regulatory evolution and extract lessons applicable to Sierra Leone’s own nascent hydrocarbon ambitions.
The optics were not lost on observers. That a neighboring West African nation, one still in the early stages of building its petroleum governance architecture, would look to Nigeria as a model reflects a broader regional acknowledgment that, whatever its past stumbles, Nigeria has begun assembling a more credible and modern upstream regulatory system.
While the regulatory signals are positive, analysts note that enforcement rhetoric must be matched by institutional follow-through. Nigeria has, in the past, announced sweeping reforms in its oil sector that were subsequently diluted by political pressure, judicial challenges, or bureaucratic inertia.
The test of the PIA’s drill-or-drop provision will ultimately lie not in the declarations made in conference rooms, but in whether licences are genuinely revoked when operators fail to drill and whether those revoked blocks are reallocated swiftly and transparently to investors prepared to explore them.
For now, the message from the NUPRC is clear: Nigeria’s patience with idle acreage has expired.
WHAT YOU SHOULD KNOW
Nigeria has drawn a definitive line under decades of licence hoarding in its oil sector. Through strict enforcement of the “drill-or-drop” provision in the Petroleum Industry Act, the NUPRC is compelling operators to either explore or relinquish idle oil blocks, a reform long overdue in Africa’s largest petroleum economy.
With 50 blocks on offer in the 2025 licensing round and caps in place to ensure fair access, the policy is already attracting serious investors. Nigeria is no longer in the business of rewarding inaction. Drill, or get out of the way.
