NUPRC Moves to Enforce Drill-or-Drop Rule on Non-Performing Oil Acreages
The Commission, in a circular dated September 14, 2026, addressed to holders of Petroleum Prospecting Licences awarded under the 2020 Marginal Field Bid Round, the 2022/2023 Mini Bid Round and the 2024 Licensing Round, said the move was aimed at ensuring that licensed acreages were actively worked and contributing to increased oil and gas production.
NUPRC said licence holders were required to comply with their statutory work commitments and execute approved work programmes within the stipulated licence periods.
It said a petroleum prospecting licence was granted for a defined initial exploration period, with any extension conditional on the fulfilment of the applicable work commitments.
According to the Commission, the obligations contained in the licence instruments, General Licence Conditions, Concession Contract, Minimum Work Programme and Work Performance Security collectively determine a licensee’s entitlement to continue holding an acreage.
NUPRC said the PIA was based on the principle that oil and gas acreages were granted to be worked, while acreages that were not developed within their stipulated terms could return to the Federal Government.
It warned that enforcement measures against non-performing acreages could include refusal to extend licences, requiring relinquishment, calling in work performance securities and commencing revocation proceedings.
However, the regulator stressed that its objective was to increase production rather than cause forfeiture of oil and gas assets.
It acknowledged that licensees could face challenges relating to financing, rig availability, security, host community engagement, infrastructure, regulatory approvals and partner arrangements.
The Commission therefore invited affected licensees to notify it of such constraints by October 31, 2026.
The licensees are expected to provide details of their level of compliance with licence obligations, including execution of approved work programmes, the specific constraints affecting their operations, as well as proposed mitigation measures and revised implementation timelines.
NUPRC, however, warned that engagement with the Commission would not suspend the term of a licence or exempt a licensee from its contractual and statutory obligations.
It also said it would not assume jurisdiction beyond its statutory mandate, displace agreed dispute-resolution mechanisms or interfere with the jurisdiction of the courts.
The Commission further urged licensees to ensure that partnership and financing agreements adequately address participating interests, operatorship, deadlock, cash calls, defaults, assignments, changes of control and dispute resolution.
It noted that internal disputes between partners would not constitute an excuse for failing to meet licence obligations.
The circular was signed by the Commission’s Chief Executive, Oritsemeyiwa Eyesan.
