The Nigerian Upstream Petroleum and Regulatory Commission have revealed plans by the Federal Government to revoke dormant oil exploration leases granted to companies that have yet to undertake exploration activities.

Gbenga Komolafe, the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission, informed Reuters on Monday that only companies with both technical expertise and financial capability would retain their leases.

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Under the Petroleum Industry Act (PIA), the commission is prioritizing the delivery of value for the nation, ensuring that only technically and financially viable firms retain their leases, Komolafe stated.

The commission is set to conduct reviews of existing leases, and the awarding of new leases will be contingent on specific terms and conditions.

Recent data from the NUPRC indicates that of the 53 exploration leases issued between 2003 and the present, over 60 percent of prospecting licenses granted to local and foreign oil companies have expired.

Out of the 53 licenses, 33 have lapsed, including four entangled in contract disputes. Although automatic revocation has not occurred, the regulator is no longer willing to allow companies to indefinitely hold on to leases.

The enactment of the PIA in 2021 granted the regulator the authority to scrutinize the technical and financial capabilities of companies holding oil exploration leases.

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The oil exploration sector in Nigeria has witnessed limited investments as major oil companies exit onshore and shallow water assets due to escalating insecurity, sabotage of oil infrastructure, and legal disputes with communities in the Niger Delta.

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The industry is grappling with low investments in exploration activities, coupled with reduced crude oil production resulting from theft and pipeline vandalism.