The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has warned oil companies holding certain petroleum licences that they could lose their acreages if they fail to meet the work commitments attached to them.

The warning came from the Commission’s Chief Executive, Mrs Oritsemeyiwa Eyesan, who said NUPRC was prepared to enforce the “Drill-or-Drop” provisions of the Petroleum Industry Act (PIA) 2021 as part of efforts to push up crude oil production in Nigeria.

Eyesan issued the warning in a circular dated Friday and addressed to holders of licences obtained through the 2020 Marginal Field Bid Round, the 2022/2023 Mini Bid Round and the 2024 Licensing Round.

She urged the affected licensees to comply with their statutory obligations, stressing that holding an oil acreage comes with clear responsibilities that must be fulfilled within specified timelines.

According to her, failure to meet those obligations could lead to the non-extension of licences, relinquishment of acreage and enforcement of work performance securities. In serious cases, she said, the commission could commence proceedings to revoke the affected licences.

The circular, referenced NUPRC/1127/VOL.13/55, explained that the enforcement drive was designed to ensure that oil fields awarded to investors are actually developed and worked, rather than left inactive while Nigeria continues to seek higher crude oil output.

Eyesan said the PIA was built around the principle that petroleum acreage is awarded for the purpose of development and production.

“Non-performing acreage will return to the Federal Government,” she said, citing Sections 77, 78 and 88 of the PIA as the legal basis for the principle. She added that the Act also provides enforcement mechanisms for default and revocation under Sections 96 and 97.

She stressed that continued ownership of a licence is tied directly to the fulfilment of the obligations attached to it.

“Continued possession of a licence depends on the licensee meeting the obligations attached to it within the stipulated period,” Eyesan said, adding that a licensee’s right to retain an acreage is dependent on performance during the approved term.

Despite the tough warning, the NUPRC boss made it clear that revocation was not the commission’s primary objective.

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She said the regulator’s priority was to get oil fields producing and to work with licensees facing genuine operational difficulties, provided such engagements remained within the limits of the law.

Eyesan identified several factors that could affect the ability of companies to deliver on their approved work programmes. These include access to financing, availability of drilling rigs, insecurity, relationships with host communities, infrastructure limitations, regulatory approvals and arrangements between business partners.

To determine the actual level of compliance, NUPRC directed the affected licensees to submit their compliance status to the commission by October 31.

The companies are expected to indicate the extent to which they have executed their approved work programmes, identify specific challenges slowing down implementation and provide proposed solutions.

Where necessary, they are also required to submit revised implementation timelines showing how and when outstanding obligations will be completed.

Eyesan, however, cautioned that discussions between licensees and the regulator would not amount to a suspension of statutory obligations.

She said NUPRC would operate strictly within its legal mandate and would not permit regulatory engagements to become a means of indefinitely delaying licence commitments.

The commission also warned that disagreements between partners would not protect a licensee from enforcement action.

According to Eyesan, internal disputes within companies or among joint-venture partners cannot be used as an excuse for failing to meet obligations imposed under a petroleum licence.

The latest directive places renewed emphasis on performance as a condition for retaining oil acreage, with affected companies now facing an October 31 deadline to explain their compliance position, challenges and plans for completing outstanding commitment.