Dozens of Oil Block Licences Set to Expire in June, Raising Industry Concerns

Nigeria’s oil and gas sector is bracing for major changes as over 55 oil block licences are set to expire before the end of 2025, with a significant number of them—up to 40—reaching their deadline in June. This development has sparked conversations within the industry about the broader implications for oil production, investor confidence, and the stability of Nigeria’s energy output.

Many of the licences nearing expiration include key Oil Mining Leases (OMLs) and Oil Prospecting Licences (OPLs) located primarily in the Niger Delta region, the heart of Nigeria’s oil production. Some of the notable blocks on the list include OMLs 29, 30, 33, 40, 42, 43, 46, 49, 53, and 62. These blocks are operated by a mix of indigenous oil firms and joint venture arrangements involving international oil companies. Operators include major players such as Sahara Energy, Oando, and the CleanWaters Consortium. Additionally, 41 Petroleum Prospecting Licences granted during the 2022 marginal oil field licensing round are also set to expire this year unless proactive steps are taken to renew them.

This situation comes at a time when Nigeria is striving to ramp up oil production after years of decline due to pipeline vandalism, underinvestment, and regulatory uncertainties. The expiration of these licences adds another layer of complexity to the government’s efforts to stabilize and grow the sector.

The Nigerian government, through the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), has signaled a strict approach to managing these expirations. The Commission has reiterated its commitment to enforcing the terms of the Petroleum Industry Act (PIA), particularly the “Drill or Drop” clause which requires licence holders to commence operations within a specified period or risk forfeiting their assets. This provision was designed to prevent hoarding of oil fields and encourage timely development.

Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has made it clear that the days of speculative licence holding are over. He recently expressed dissatisfaction with the low level of development in many of the marginal fields awarded in recent licensing rounds. According to Lokpobiri, only about 5% of the 60 marginal fields awarded are currently producing oil. As a result, the government is considering revoking non-performing licences and redistributing them to companies that can demonstrate technical and financial capacity to bring them into production swiftly.

This tough stance is seen as both a corrective measure and a strategic move to attract serious investors. It sends a clear message that regulatory compliance and operational activity are now prerequisites for maintaining a presence in Nigeria’s upstream sector. However, industry watchers warn that this could also lead to legal battles and disruptions if not handled carefully, especially in cases where operators claim delays were caused by factors beyond their control, such as insecurity or logistical challenges.

The potential revocation or non-renewal of these licences also has implications for employment, community relations, and government revenue. In many host communities, oil operations provide critical infrastructure and social services. A sudden halt in operations due to expired or revoked licences could fuel local unrest and increase tensions, especially if new operators are slow to resume activities.

Moreover, the Nigerian economy is heavily reliant on oil exports, which account for the majority of its foreign exchange earnings. Any disruption in oil output caused by licence transitions could impact national revenue at a time when the country is grappling with inflation, rising debt, and efforts to diversify the economy.

Some industry analysts believe that while the government’s approach is necessary to clean up the sector and drive better performance, it must be matched with a transparent and efficient reallocation process. If expired blocks are swiftly reassigned to capable and well-funded operators, Nigeria could see a boost in production in the medium term. However, if the process is marred by bureaucracy or favoritism, it could discourage investors and deepen skepticism about the country’s business climate.

As the June deadline approaches, both the government and industry stakeholders are under pressure. Companies with licences set to expire must act quickly to demonstrate commitment, either by showing evidence of ongoing development or by negotiating extensions. Meanwhile, regulators must balance enforcement with fairness to avoid unintended disruptions in the sector.

In the coming weeks, decisions made by the NUPRC will be closely watched as they could reshape the upstream oil landscape in Nigeria for years to come. For now, the message is clear: dormant assets will no longer be tolerated, and only active players will have a place in the future of Nigeria’s oil industry.