Come June 2025, around 40 oil exploration permits in Nigeria should have expired. The firms currently in charge of these oil blocks could lose their rights to operate them.
This hinges on whether the Minister of Petroleum decides to grant renewals, as mandated by the Petroleum Industry Act (PIA).
A report from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in May detailed that these various permits, initially awarded on June 28, 2022, are scheduled to expire on June 27, 2025.
These include exploration licenses given to oil companies after the 2020 marginal fields bidding process. NUPRC clarified that the law allows for a possible three or five-year extension. However, this extension will depend on how well the operating companies have performed on those fields.
Marginal fields are smaller oil-containing areas that were previously developed but have not produced oil for over a decade.
Government Wants More Local Involvement
Nigeria’s government started the marginal field program in the 1990s. The goal was to enable Nigerian-owned oil and gas companies to play a bigger role in finding and producing oil by letting them own and run these smaller oil blocks.
The 2020 bidding round saw several Nigerian companies win the rights to operate 57 of these marginal oil fields offered by the government.
Companies like Matrix Energy, AA Rano, Ardova Plc, and Duport Midstream are among those whose licenses are expiring. Others include Genesis Technical, Twin Summit, Bono Energy, Deep Offshore Integrated, Odu’a Oil, MRS, and Petrogas.
Also on the list are North Oils and Gas, Pierport, Metropole, Pioneer Global, Shepherd Hill, Akata, NIPCO, Aida, YY Connect, Accord Oil, Pathway Oil, Tempo Oil,1 and Virgin Forest.
Specific Oil Fields in Question
NUPRC data indicates that EOP Energy’s license for the Emohua field (OML 22) will expire next month. EOP Energy is a partnership of Erebina Energy Resources, Omega-Butter Marginal Fields, and Intessa Energy. Similarly, Ardova Plc and Petrodev’s operation of the Olua field (OML 25) through Ardogreen Energy is also ending.
Ingentia Energies, a group of Suntrust Oil, Petrogas Energy, and Sonora GTP, could lose the Egbolom field (OML 23) if no renewal occurs. Matrix Energy and Bono Energy’s Atambia E&P will no longer run the Alamba field (OML 42) without renewal. Likewise, Energia and Annajul Rosari face losing the Irigbo field, also in OML 42.
ENEROG Limited, consisting of Energia and Sterov Consortium, might also lose the Ugbo field license (OML 40). A. A. Rano and Acrete Petroleum’s operation of the Oloye field (OML 95) is also affected.
Odu’a Investment and Pioneer Global could stop operating the Bita oil field (OML 95) without the minister’s approval. Transit Oil’s Kudo field (OML 89) will also expire in June.
Deep Offshore Integrated and Virgin Forest E&P’s license for the Bime field (OML 49) is also expiring. Platform Petroleum, Shepherdhill, and Nord Oil’s SHN Energy currently run the Kurl field (OML 49), but their license is also near its end.
Northwest Petroleum, Genesis Technical, and Gab & Nutella’s operation of the Ede field (OML 67) under Ede E&P Ltd is affected. Duport’s Ekpat field (OML 67) and Oceangate Engineering Oil’s Udara field (OML 70) are also involved.
The Nkuku field (OML 70), operated by a group including NIPCO E&P, Aries Petroco Resources, and Pathway Universal Investment, is also facing expiry. Reports suggest some license holders haven’t developed these fields since 2022.
PIA Rules on License Renewal
NUPRC documents state that under the PIA, companies must apply to the commission to renew oil mining leases or convert licenses.
“For production sharing contracts, the company holding the contract must apply. For Nigerian-owned companies working alone without government backing, the company or its assignees must apply.”
“For joint ventures, all involved companies must apply together. For marginal fields, all winning bidders must apply together. For renewing oil mining leases of Nigerian companies working alone with government backing, all involved companies must jointly apply and sign.”
“For an oil mining lease, the company leasing the block must apply to the Commission according to section 303(1) of the Act and its rules,” the document stated.
The commission pointed out that the PIA requires renewal applications for oil mining leases to be made at least 12 months before the lease ends. This means companies with licenses expiring in June 2025 should have applied since June 2024.
NUPRC stated that the law allows for a possible three or five-year extension, depending on the oil block’s location. However, this extension depends on how well the company has developed the field.
NUPRC on Renewal Decisions
Olaide Sonola, NUPRC’s Corporate Affairs Manager, said that whether these licenses are renewed depends on ongoing talks with the companies and the commission’s upcoming guidelines.
“The law allows for a possible three or five-year extension, 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.
Energy expert Professor Emeritus Wumi Iledare believes license renewal will likely only happen if significant exploration or development has occurred. He stated that without such activity, renewal is improbable.
Reviewing NUPRC data, Iledare noted these are mainly Petroleum Prospecting Licenses with set expiry dates.
He stressed that renewal depends on meeting NUPRC’s requirements and that license holders should have already contacted the commission.
“It’s normal for licenses to end after three years, and renewal is likely only with real exploration or development. Without this, renewal is unlikely,” Iledare said.
He commended NUPRC for supporting leaseholders while enforcing the PIA. “The commission deserves praise for helping leaseholders and firmly applying the PIA, especially regarding timely return of oil blocks at the end of their terms. I am proud of this new approach to regulation under the PIA,” Iledare added.
Government to Reclaim Inactive Oil Assets
The Federal Government has also declared its intention to take back all inactive oil assets.
Concerned about falling oil revenue, the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, announced a ‘drill or drop’ policy. He said the government will seize all idle oil wells from companies holding onto them without production.
The government also threatened to cancel licenses of those who haven’t started exploring for oil.
“One key step to boost production is to reallocate any unused oil wells. The PIA allows for wells not used in recent years to be given to capable companies for exploration to increase our output.”
“I am talking to stakeholders, the IOCs, and the Nigerian National Petroleum Company Limited, saying, ‘If you have many oil wells and aren’t using them, we will apply the law’.”
“A reason for our low production is too many closed wells, some near marginal fields. By taking these wells legally and giving them to others with a production timeline, we can increase output,” Lokpobiri said last year.
The minister mentioned that of about 60 companies approved in the last marginal bid round, only a few have started production. He said he won’t hesitate to cancel unused licenses.
“I don’t need to know you to renew or cancel your license. Of about 60 winners from the last marginal bid round, maybe only three to five are producing.”
“Their three-year licenses are expiring soon, with a possible three-year renewal. But this requires a work plan. If you don’t follow it, I can cancel the license. Holding a marginal oil license without funding hurts everyone,” he stated.
NUPRC plans to launch the 2025 licensing bid round soon.
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