The federal government is set to revoke licensing of dormant oil fields and take them over for optimum value, even as it said, out of the over 60 companies that got approvals in the last marginal bid round, only about five have actually started production.
This is to support efforts by the government to shore up oil revenue and increase production .
Speaking at the Second Quarter Dinner of the Petroleum Club, with the theme, ‘Funding Our Way out of the Crisis: Looking up to the Oil and Gas Sector,’ in Lagos on Monday, minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, disclosed that, out of the over 60 companies that got approvals in the last marginal bid round, only about five have actually started production, saying he would not hesitate to cancel unused licences.
“I don’t need to know you to renew or sign your licence and I will also not look at your face for me to cancel it. Out of those who benefited from the last marginal bid round, out of about 60, maybe only about three or four or five have started producing. Their licences will expire sometime this year because it is for three years, and renewable for another three years. But the condition is that you have a work plan. if you don’t follow your work plan, I also have the discretion to cancel it.
“If somebody has the marginal oil licence and doesn’t have the capacity to raise funding, you’re just impoverishing him,” the former senator mentioned.
He said the government would no longer allow any company or individuals to hold on to licences as souvenirs, threatening to farm them out.
The government is also threatening revocation of all licences given to individuals and companies that have refused to start oil exploration. He also expressed serious concerns that the Nigerian has lost about $30 billion to low oil production in the past two and half years.
Lokpobiri maintained that his target was to ensure the country ramped up production through investments and revenue growth, stressing that it was the mandate given to him by President Bola Tinubu.
He said: “One of the things we want to do to ramp up production is to see that any well that is idle has to be allocated to people. The Petroleum Industry Act gives the opportunity that any well that hasn’t been used in the past few years could be farmed out and be given to people who have proven capacity to do exploration so that we can boost production.
“I am engaging stakeholders, the IOCs, the Nigerian National Petroleum Company Limited to say, ‘Look, if you have a multiplicity of oil wells and you are not using them, we will apply the law’
“One of the reasons why our production is low is because we have too many shut wells, some of them contiguous to our marginal fields or oil wells. But by the time we take those wells in line with the law and give you people, and we give a timeline upon which you must produce, we will be able to increase production.”
“The ‘Big Boys’ are holding on to these licences as souvenirs, they are not doing anything about them. That is why we are farming them out. We will not allow any company to do that. Let’s start to do things differently,” he noted.
The minister further said that, “the worst thing that will happen to Nigeria is for our refinery to be fully rehabilitated and we will have to import crude from another country. That’s why I’m here to engage you together, let’s change this story.
“In solving the funding challenges, pull your resources together, go into partnerships, so that you can fund the investments in this sector”.
He spoke further that divestment is not peculiar to Nigeria. “Everywhere in the world, companies divest for different reasons. But in Nigeria, the ‘Big Boys’ are not running away, they want to divest and go deep offshore. This gives opportunities to Nigerians who have grown capacity to take these assets, maximise the productivity in these assets and increase production locally. And Nigeria will not suffer energy poverty,” he advised.
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