FG threatens to withdraw idle oil blocks

The Federal Government, on Tuesday, expressed concerns over the increasing number of idle and underdeveloped oilfields in Nigeria, warning International Oil Companies (IOCs) that they risked losing underutilised assets.

Speaking at the Cross Industry Group (CIG) meeting in Florence, Italy, the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, said the President Bola Tinubu-led administration had created a favourable investment environment and that IOCs must now make decisive financial commitments to increase production.

At the meeting, which brought together key industry stakeholders, IOCs pointed to the challenges posed by Engineering, Procurement and Construction (EPC) contractors as a major hindrance to project execution. But Lokpobiri dismissed this as an excuse, stating that EPC contractors would only engage when they see firm investment decisions by oil operators.

“The government has done its part by providing investment-friendly fiscal policies, including the President’s Executive Order incentivising deepwater investments. 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,” he said.

In a move to address stagnation in oilfield development, Lokpobiri reiterated that the Federal Government would begin enforcing the “drill or drop” provisions of the Petroleum Industry Act (PIA).

“We cannot continue to have assets idle for 20 to 30 years without development. If you are not utilising an asset and it remains underdeveloped for decades, it neither adds value to your books nor us as a country,” he said.

To optimise development, he encouraged IOCs to explore collaborative measures, including farm-outs and shared infrastructure. However, he clarified that the government would not hesitate to reallocate dormant assets to investors willing to develop them.

“Like any responsible government, we will take back these assets and allocate them to those ready to work,” he added. The minister also stressed the need for IOCs to support Nigeria’s expanding refining sector. With more refineries coming on stream, he said, a steady supply of crude oil would be essential to sustaining domestic fuel production and meeting export commitments.

“Ramping up production is not just about meeting international supply obligations; it is also crucial for ensuring that our local refineries have the feedstock needed to function efficiently,” Lokpobiri noted.

He further advised operators to prioritise farm-out agreements, where assets are located near existing infrastructure, rather than investing in new Floating Production Storage and Offloading (FPSO) units that would incur higher costs.

Chairman of the Oil Producers Trade Section (OPTS), Osagie Osunbor, commended the minister for his direct engagement with industry players and the government’s commitment to fostering a conducive investment environment.

“We appreciate the government’s efforts to ensure a stable and attractive business climate. The minister’s engagement has provided critical insights and challenged us as industry players to step up efforts to increase production,” Osunbor said.

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