Nigeria has declared the end of the era when oil companies could hold petroleum assets "as souvenirs or symbols of wealth" without drilling, according to Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri. Under the drill-or-drop provisions of the Petroleum Industry Act (PIA), the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has been empowered to recover undeveloped assets and make them available to investors willing to develop them—and has already offered 50 such assets for bidding, with another licensing round in the offing, AllAfrica reports.

What Happened

Speaking in interviews published in 'Upstream Gaze', a special edition of a quarterly magazine by the NUPRC to mark its fifth anniversary, Lokpobiri said the drill-or-drop policy had "kept operators on their toes," according to AllAfrica. The policy requires oil and gas companies to develop their licensed petroleum assets within a stipulated period or risk losing them to the regulator, which can revoke or recover licences and reallocate them. "Some operators are now willing to relinquish assets voluntarily because that may be preferable to regulatory recovery," Lokpobiri said, according to AllAfrica. "Others are reassessing their portfolios and recognising that certain assets no longer fit their development plans." The minister also claimed the number of active drilling rigs in Nigeria had risen from between 10 and 14 in 2023 to more than 60 currently, attributing the increase to reforms and improved regulatory activity. Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, said Nigeria must translate its 215 Trillion Cubic Feet (TCF) of proven gas reserves into higher domestic supply, stronger infrastructure and industrial growth over the next five years, AllAfrica reports. Meanwhile, the Olu of Warri, Ogiame Atuwatse III, maintained that the PIA has brought "greater calm and responsibility" to oil-producing communities by giving them a clearer stake in petroleum operations through Host Communities Development Trusts (HCDTs), according to AllAfrica.

Why It Matters

If enforced rigorously, drill-or-drop could signal a shift across African producer states: an end to speculative hoarding of mineral and hydrocarbon assets by multinationals and local elites who bank on licence appreciation rather than production. But Nigeria's history is littered with bold declarations followed by quiet exemptions, and the critical test is whether recovered assets flow to credible producers or simply circulate among connected bidders in another opaque round. For UK and European investors eyeing African upstream opportunities, the message is double-edged: regulatory risk is rising for dormant portfolios, but so is the chance to acquire relinquished acreage—provided the bidding process is transparent and the fiscal terms remain competitive. Lokpobiri acknowledged that the prolonged uncertainty before the PIA's passage drove major Engineering, Procurement and Construction (EPC) contractors and deep-offshore contractors out of Nigeria, reducing competition and contributing to "prohibitive costs," according to AllAfrica. He said the government is now engaging contractors in Europe and America to encourage their return, and cited a recent presidential executive order expected to unlock almost $50 billion in deep-offshore investments. He also pointed to the re-entry of shut-in wells following recent divestments, including Seplat Energy's acquisition of ExxonMobil's assets and Renaissance Africa Energy's acquisition of Shell's onshore assets, as evidence that dormant capacity is being revived.

Follow the Value

  • Recovered assets: 50 blocks offered for bidding under drill-or-drop enforcement, with another licensing round planned, according to AllAfrica. No breakdown of who is bidding, at what price, or whether farmgate communities will see royalties flow faster than under previous operators. - Rig count rebound: From 10–14 rigs in 2023 to more than 60 currently, per Lokpobiri—but AllAfrica provides no detail on who owns the rigs, who is drilling, or whether the uptick reflects speculative positioning ahead of licence reshuffles rather than committed long-term investment. - Contractor exodus and cost inflation: Major EPC and deep-offshore contractors left Nigeria during pre-PIA uncertainty, leaving "only one or two providers in some areas" and driving project costs above competing jurisdictions, Lokpobiri told AllAfrica. The minister is now courting their return with fiscal reforms and a presidential executive order targeting $50 billion in deep-offshore investment—but no timeline or signed commitments are disclosed. - Host community trusts: The PIA established Host Communities Development Trusts (HCDTs) to give oil-producing communities "a clearer stake," according to the Olu of Warri, per AllAfrica. What remains opaque is how much revenue the trusts have actually received, who controls disbursement, and whether farmgate communities can audit expenditure or challenge non-performance by operators.

The Questions That Need Answering

  1. Who is bidding for the 50 recovered assets, and will the process be open to public scrutiny? Nigeria has a long record of licensing rounds that favour connected domestic players and result in further speculation rather than production.
  2. What happens to Host Communities Development Trusts when an asset is revoked and re-licensed? If a new operator takes over, do existing HCDT agreements carry forward, or do communities lose accrued rights and have to renegotiate from scratch?
  3. Is the rig count increase a sign of committed capital or speculative pre-positioning? Lokpobiri claims 60 active rigs versus 10–14 in 2023, but AllAfrica provides no breakdown of contract types, drilling targets or whether wells are being completed or simply spudded to satisfy regulatory minimums.
  4. Can the $50 billion deep-offshore commitment be verified, and who signed it? Presidential executive orders do not equal bankable financing, and AllAfrica offers no names of operators, banks or timelines.
  5. Why did it take the departure of major contractors to expose Nigeria's fiscal and regulatory uncompetitiveness—and can reforms reverse the damage fast enough? Lokpobiri admits contractors left because the project pipeline dried up, yet the government is only now engaging them to return, years after the PIA was enacted.
  6. If drill-or-drop is genuinely transformative, why are some operators choosing voluntary relinquishment over development? Lokpobiri says relinquishment may be "preferable to regulatory recovery," which raises the question of whether operators are gaming the system to exit without penalty or financial exposure.

The Brew Brief View

Drill-or-drop is the right policy—on paper. Speculative licence-hoarding has drained African treasuries of revenue, starved communities of employment and locked up acreage that could have been producing for decades. But enforcement is everything, and Nigeria's track record does not inspire confidence. Offering 50 recovered assets for bidding is not the same as putting them into production, and unless the process is transparent, independently audited and subject to penalties for non-performance by new licensees, the country risks simply reshuffling dormant blocks among a smaller pool of connected operators while farmgate communities continue to wait for jobs, infrastructure and trust disbursements that never materialise.

The era of holding assets as souvenirs is gone

Lokpobiri insists—but the test will be whether recovered blocks flow to credible producers with the capital and technical capacity to drill, or whether they become new souvenirs in a different display case. African governments watching Nigeria's experiment should ask harder questions: Who audits the Host Communities Development Trusts? What penalties apply to operators who win new licences and fail to drill within the stipulated period? And can contractor confidence be rebuilt with presidential orders alone, or does it require enforceable contracts, stable fiscal terms and an end to the regulatory interference that Prof. Ibe Kachikwu, a former minister and NNPC managing director, says constrained investment during his tenure? Until those questions are answered, drill-or-drop risks becoming drop-and-reshuffle—new packaging for an old game in which value stays offshore and risk stays at the wellhead.