Economy

Nigeria’s Oil Industry Faces Shake-Up as Dozens of Licences Near Expiry

Nigeria’s oil sector is set for a major shake-up as over 55 oil licences across various oil blocks in the Niger Delta approach their expiration before the end of 2025.

The development has raised concerns among industry stakeholders with affected operators yet to receive clarity on the fate of their assets.

The looming expirations come amid stalled oil exploration efforts in Nigeria’s northern region, where progress has been slow despite the $3 billion Kolmani Integrated Development Project flagged off by former President Muhammadu Buhari in 2022.

While rig activity across the country peaked in mid-2023—rising from 29 active rigs in January to 38 by July and August before stabilizing around 37 rigs in November—the drilling activities at the Ebenyi-1 Exploration Well in Nasarawa State have stalled due to technical issues.

Similarly, at the Wadi well in Bauchi/Gombe, where the NNPC is drilling with ACME Energy Integrated Services’ Acme Rig 5, work remains on standby as the licence for the block expired and is being processed, according to details published by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

Marginal Fields at Risk

All 41 petroleum prospecting licences (PPLs) awarded to Nigerian companies under the 2022 marginal oil field licensing round face possible revocation as they approach expiration, along with several other key oil block licences.

Key assets affected include:

  • Sahara Energy’s OPL 228
  • Oando’s OML 131 in the deep offshore
  • OPL 289, managed by CleanWaters Consortium

Various PPLs tied to Niger Delta oil blocks will expire on June 27, 2025, affecting fields held by operators such as Erebiina Energy Resources (Emohua field), Suntrust Atlantic Energies (Egbolom field), and Ardova Plc (Olua field).

Other expiring licences impact operators such as Omega-Butler Marginal Fields, Intessa Energy, Petrodev Oil and Gas, Matrix Energy, and Energia Ltd, with assets spread across OMLs 22, 23, 25, 29, 30, 33, 40, 42, 43, 46, 49, 53, 62, 67, 70, 90, 95, and 100.

With the licensing cycle allowing the government to either renew or revoke oil blocks, uncertainty is growing among existing licensees amid Nigeria’s ongoing regulatory overhaul.

Unclear Future for Northern Oil Exploration

Despite the momentum gathered under the Buhari administration, which set a target of 50,000 barrels of crude oil per day from northern reserves, exploration progress has been slow. The NNPC’s plan to conduct exploration activities in 33 oil blocks across Chad, Bida, Sokoto, Benue Trough, and Anambra basins has raised skepticism among industry analysts.

A source within the Nigerian Association of Petroleum Explorationists (NAPE), speaking anonymously, expressed concerns over the lack of transparency in the inland basin projects, calling the secrecy surrounding them “disturbing.”

Meanwhile, global oil companies are shifting focus to Namibia, where TotalEnergies and Shell have made major discoveries, turning the country into a prime investment destination for oil and gas exploration. ExxonMobil, which is exiting Nigeria’s shallow water operations, is expected to commence exploration in Namibia’s frontier basins.

NNPC’s Spending on Frontier Basins Under Scrutiny

Concerns have also been raised over NNPC’s financial commitment to oil exploration in the frontier basins. 30% of NNPC’s profits—estimated at $400 million per year—are allocated to these projects under the Petroleum Industry Act (PIA). Analysts estimate that $1.2 billion may have been spent over three years without clear evidence of commercial viability.

Former President Buhari had announced the discovery of one billion barrels of crude oil in the Kolmani River II Well, but Nigeria’s proven crude oil reserves have remained stagnant, leading to doubts about the actual viability of these discoveries.

Industry Concerns and Calls for Clarity

Experts, including Afe Babalola University’s Prof. Damilola Olawuyi (SAN), have questioned the economic rationale of continued spending on uncertain frontier basin projects.

“Also, we must question how the Nigerian regulators aim to convince investors on such new explorations in this era of global energy transition, associated divestments, oil price volatility, reduced funding for new oil and gas discoveries, and prevailing production quotas and limits for existing and new production activities,” Olawuyi said.

He advised that rather than embarking on costly exploration efforts, NNPC should restructure into a fully integrated energy company, diversifying into renewable energy and lower-carbon projects.

Amid these developments, operators in the Niger Delta are awaiting direction from the NUPRC on whether their licences will be renewed or revoked, as the expiration deadlines approach. With uncertainty surrounding both existing oil blocks and northern exploration efforts, Nigeria’s oil industry faces a critical period that could reshape its long-term energy strategy.

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