The Federal Government has announced plans to enforce the “Drill or Drop” provisions of the Petroleum Industry Act (PIA) to ensure International Oil Companies (IOCs) actively develop their assets or risk losing them.
Heineken Lokpobiri, Minister of Petroleum Resources (Oil), made this declaration during the Cross Industry Group (CIG) meeting in Florence, Italy, attended by key players in Nigeria’s oil and gas sector.
Enforcing Asset Development
Lokpobiri emphasized that assets lying idle for decades provide no value to either the companies holding them or the Nigerian economy. He called on industry players to embrace collaborative strategies, including shared resource utilization, farm-outs, and the transfer of underutilized assets to willing investors.
“We cannot continue to have assets sitting idle for 20 to 30 years without development. If you are not utilizing an asset and it remains underdeveloped for decades, it neither adds value to your books nor to us as a country. Like any responsible government, we will take back these assets and allocate them to those willing to go to work.”
The Minister urged operators to consider farm-out agreements, especially for assets near existing infrastructure, rather than opting for costly new Floating Production Storage and Offloading (FPSO) units.
IOCs Must Make Firm Investment Decisions
Lokpobiri also addressed concerns raised by IOCs regarding delays caused by Engineering, Procurement, and Construction (EPC) contractors, stating that EPC firms will only commit when they see clear investment signals from operators.
He noted that the government has already created a favorable investment climate, including the President’s Executive Order to incentivize deepwater investments.
“The Government has done its part by providing the requisite investment-friendly fiscal policies. Now, the ball is in the court of the IOCs and other operators to make strategic investment decisions that will drive increased production and sustainability in the sector.”
The Federal Government, he assured, remains committed to fostering a thriving oil and gas industry, but operators must match this commitment with tangible investments to drive growth, energy security, and long-term sustainability.
Supporting Local Refining Efforts
With more refineries coming online, including the Dangote Refinery and modular refining facilities, the Minister stressed the need for IOCs to prioritize local crude supply. He highlighted that ramping up production is essential for Nigeria to meet both domestic and international energy demands.
Industry Leaders Respond
Osagie Osunbor, Chairman of the Oil Producers Trade Section (OPTS), commended the government’s direct engagement with industry stakeholders and its ongoing efforts to strengthen the sector.
“We appreciate the government’s commitment to creating a conducive investment environment. The Minister’s engagement has provided critical insights and has also challenged us as industry players to step up efforts to increase production.”
Looking Ahead
As the Federal Government moves to enforce the Drill or Drop policy, the onus is now on IOCs to align with Nigeria’s energy security goals. By committing to asset development and increasing crude production, operators can contribute to a more stable, efficient, and self-sufficient petroleum sector.
