FG Set to Enforce ‘Drill or Drop’ Clause, NUPRC Sensitises Operators on PIA

Emmanuel Addeh in Abuja

The federal government is set to enforce the ‘drill or drop’ clause in the Petroleum Industry Act (PIA), which gives operators a period of three years to begin oil production or relinquish the assets to the federal government.

To this end, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has convened a  stakeholder engagement which focused on the application and implications of Section 94 of the PIA, 2021 which deals with the matter.

According to the section of the PIA: “Within three years of the effective date, any marginal field that has not been transferred to government, shall be subject to the following process and the holder of the oil mining lease- present a field development plan for the marginal field:

“With the consent of the Commission and on terms and conditions as the Commission may approve under regulations, farm out the discovery or relinquish the field in accordance with the provisions of this Act.

“ The consent of the Commission to the farm-out of a marginal field under subsection (4) (b) shall, amongst others, be subject to the farmee presenting a field development. plan over a period of time agreed with the Commission and a regulation made under this Act

“The failure to present a field development plan under section 94 (4) (a) of this Act or within the time frame specified under section 94 (5) of this Act shall require the relinquishment of the marginal field”

The session, chaired by the Commission’s Chief Executive, Gbenga Komolafe, addressed key provisions of the PIA and their impact on the upstream petroleum sector.

Represented by the Executive Commissioner for Exploration and Acreage Management, Bashari Indabawa, Komolafe emphasised the importance of effective management and administration of concessions to boost production and enhance the development of Nigeria’s hydrocarbon reserves.

He also highlighted the commission’s strategies for implementing bid rounds to attract investments and optimize resource utilization.

The session, a statement posted on the commission’s social media handles, included a presentation on the NUPRC’s mandates as outlined in Sections 6, 7, and 8 of the PIA, focusing on the technical, commercial, and operational roles of the Commission.

 Stakeholders, it said, were also briefed on Section 94(4) of the PIA, which mandates the relinquishment of marginal fields or discoveries left fallow for over three years, as well as related provisions under Sections 94(6), 94(7), and 94(8)(a)(b).

The engagement provided an opportunity for stakeholders to discuss the practical implications of these provisions for fostering growth, transparency, and sustainability in Nigeria’s upstream petroleum sector the NUPRC said.

Meanwhile, the he Lagos State Commissioner for Energy, Biodun Ogunleye, has solicited the support of the NUPRC in securing favourable pricing and an adequate supply of gas for power generation.

The appeal was made in Abuja when the Commissioner led a team from the Lagos State Ministry of Energy on a visit to the NUPRC.

According to Ogunleye, the Lagos State Government has launched an aggressive drive to provide additional power capacity to the national grid, considering the high demand for electricity for both commercial and domestic use.

He added that securing commercial gas pricing for Lagos Sstate would aid in boosting the nation’s production capacity.

On his part, the Commission Chief Executive, Komolafe, who highlighted the mandate of the Commission, promised to set up a team from the Commission to work with the Lagos State Ministry of Energy and other stakeholders on the viability of the appeal.

Also, oil edged higher yesterday as concerns about escalating hostilities in the Ukraine war potentially disrupting oil supply from Russia outweighed data showing rising U.S. crude stocks.

Brent crude futures for January were up 49 cents, or 0.7 per cent, to $73.80 a barrel at 1313 GMT. U.S. West Texas Intermediate crude futures for December , due to expire on Wednesday, were up 71 cents, or 1 per cent, to $70.10, while the more active WTI contract for January was up 56 cents, or 0.8 per cent, at $69.80.

The escalating war between major oil producer Russia and Ukraine has kept a floor under the market this week.

On Tuesday, Ukraine used U.S. ATACMS missiles to strike Russian territory for the first time, Moscow said, while Russian President Vladimir Putin lowered the bar for a possible nuclear attack.