Nigeria is preparing to enforce Section 94 of the Petroleum Industry Act (PIA), which grants operators a three-year period to commence oil production or risk having their assets relinquished to the federal government. This provision, often referred to as the “drill-or-drop” clause, is now being wielded as a tool to address delays in field optimization.
The Minister of State for Petroleum Resources, Heineken Lokpobiri, announced this enforcement initiative during his address at the Cross Industry Group (CIG) meeting in Florence, Italy. He emphasized that bringing all idle wells into active production aligns with the nation’s best interests. The minister provided reassurance to stakeholders that under President Bola Tinubu’s leadership, the government has implemented all necessary incentives to ensure the smooth operation of international oil companies (IOCs) in Nigeria.
Lokpobiri stressed that the time has come for operators to reciprocate the government’s efforts by making final investment decisions (FIDs) that will boost oil production. He also addressed challenges confronting the sector, including issues related to engineering, procurement, and construction (EPC) contractors. The minister noted that EPC contractors would be reluctant to engage unless they observe strong commitments from industry players.
The government has already made significant progress in establishing investment-friendly fiscal policies, according to Lokpobiri. Now, the responsibility falls on IOCs and other operators to make strategic investments essential for driving growth and sustainability within the sector.
Furthermore, the Minister highlighted the critical importance of domestic crude supply for Nigeria’s energy security. He emphasized that increasing oil production represents the most effective approach to balancing the country’s internal energy requirements with its external commitments. Lokpobiri called for enhanced collaboration among industry stakeholders, urging them to consider shared resources for contiguous assets and to release underutilized assets to operators willing to invest in production.
This move signifies a substantial step toward ensuring that Nigeria’s oil industry remains competitive and sustainable while aligning with national energy security objectives.
Source: Oriental News
