The Federal Government has warned International Oil Companies (IOCs) to either develop idle oilfields or risk losing them.
Minister of State for Petroleum Resources Heineken Lokpobiri issued the ultimatum at the Cross Industry Group meeting in Florence, Italy.
Lokpobiri emphasized that the government has created a favorable investment environment, and it’s now up to the IOCs to make decisive financial commitments to increase production.
The minister stated that the government would enforce the “drill or drop” provisions of the Petroleum Industry Act (PIA) to address stagnation in oilfield development. This move is aimed at ensuring that oilfields are developed and utilized, rather than remaining idle for decades. Lokpobiri noted that idle assets neither add value to the operators’ books nor to the country’s economy.
Lokpobiri also encouraged IOCs to explore collaborative measures, such as farm-outs and shared infrastructure, to optimize development. He advised operators to prioritize 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.
The minister further stressed the need for IOCs to support Nigeria’s expanding refining sector, which requires a steady supply of crude oil to sustain domestic fuel production and meet export commitments. With more refineries coming on stream, Lokpobiri emphasized that ramping up production is crucial for ensuring that local refineries have the feedstock needed to function efficiently.
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. Osunbor noted that the minister’s engagement has provided critical insights and challenged industry players to step up efforts to increase production.
