Nigeria has renewed its threat to revoke dormant upstream oil licences, signalling a tougher enforcement of the Petroleum Industry Act (PIA) as the government seeks to unlock additional crude production from idle assets amid mounting pressure to raise output and revenues.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), on Friday, issued what it described as a final compliance notice to holders of Petroleum Prospecting Licences (PPLs) awarded under the 2020 Marginal Field Bid Round, the 2022/2023 Mini Bid Round and the 2024 Licensing Round, warning that failure to execute approved work programmes could trigger relinquishment and revocation proceedings.

The move revives the government’s “drill-or-drop” policy, a cornerstone of the PIA designed to prevent companies from holding acreage without developing it.
In a circular signed by the Commission Chief Executive, Mrs Oritsemeyiwa Eyesan, the regulator said licences were granted for finite periods and were tied to mandatory work commitments, adding that continued possession depended on performance rather than ownership.

The commission cited Sections 77, 78, 88, 96 and 97 of the PIA, saying it could refuse extensions, require relinquishment, call in work-performance securities and commence revocation proceedings against non-performing licence holders.

Companies have until October 31, 2026, to submit their compliance status, explain constraints affecting execution and provide revised implementation schedules.

Although the regulator acknowledged that financing constraints, rig shortages, security challenges, host-community engagement, infrastructure limitations, regulatory approvals and partner disputes could slow development, it maintained that such issues would not automatically excuse non-performance.

“The Commission’s objective is to increase production, not forfeiture,” it said, while offering to work with operators within the limits of the law to resolve genuine implementation challenges.

The latest warning affects three licensing exercises that collectively brought hundreds of investors into Nigeria’s upstream sector. The 2020 Marginal Field Bid Round covered 57 marginal fields and produced 128 successful awardees that made complete or partial signature-bonus payments.

Subsequently, the 2022/2023 Mini Bid Round produced 25 winners and 10 reserve bidders, while the 2024 Licensing Round announced 19 winners and six reserve bidders.

The renewed enforcement comes as Nigeria struggles to maximise production from existing assets despite fresh investments and regulatory reforms introduced under the PIA. Rather than focusing solely on awarding new licences, the commission appears increasingly determined to ensure previously allocated acreage translates into drilling activity and commercial production.

The policy also reflects a broader shift towards performance-based asset management, where operators that fail to meet agreed work obligations risk losing acreage to investors deemed capable of developing the resources.

Industry analysts say the threat could accelerate investment decisions by licence holders that have delayed exploration because of funding constraints, unresolved partnerships or operational bottlenecks.

However, they also caution that enforcement alone may not unlock production if structural obstacles persist.

Access to capital remains a major hurdle for indigenous operators, particularly those awarded marginal fields, while security concerns in parts of the Niger Delta continue to increase operating costs and delay field development.

The availability of drilling rigs has also tightened following increased offshore activity, potentially affecting execution timelines for smaller operators. For government, however, idle licences represent an opportunity cost.

Every undeveloped field means deferred production, delayed royalties and taxes, and unrealised economic benefits at a time when authorities are under pressure to improve oil earnings, strengthen foreign-exchange inflows and support budget financing.