The Nigerian Government Is Taking A Step To Increase Oil Production By Enforcing The Drill Drop Clause In The Petroleum Industry Act
The federal Government is set to implement drill or drop policy in the oil operators have 3 years to commence production or forfeit Assets to the federal government.
The Nigerian upstream petroleum regulatory commission (NUPRC) has organized a stakeholder engagement to discuss the application and implications of section 94 of the petroleum industry Act 2021, this section specifically addresses the drill or drop clause, which requires oil operators to begin the production within a specified timeframe relinquish their assets to the federal government.
The PIA marginal fields not transferred to the government within 3 years must undergo the following process, requiring oil mining lease holders to submit a field development plan. The commission approval farming out a marginal field discovery, subject to regulations and conditions, including the development plan.
The commission will only approve field farm-outs if the farmers provides a field development plan, conforming to agree schedules and regulatory standards.
The failure to provide a field development plan under section 94 of this Act or within the time frame specified under section 94 of this act shall require the relinquishment of the marginal field.
The commission chief executive, Gbenga Komolafe, addressed the important provision of PIA and their impact on the upstream petroleum sector. The executive commissioner for exploration and Acreage management, Bashari Komolafe emphasized the importance of effective management and administration of concession to boost production and enhance the development of Nigeria reserves.
This engagement provided an opportunity for the stakeholders to discuss the practical implications of these provisions fostering growth, transparency and sustainability in the Nigeria upstream petroleum sector.
