The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has begun enforcing the “Drill-or-Drop” provisions of the Petroleum Industry Act (PIA) 2021, warning holders of non-performing petroleum prospecting licences that they could lose their licences if they fail to meet their approved work commitments.
According to a circular issued by the Commission, the enforcement affects licences awarded under the 2020 Marginal Field Bid Round, 2022/2023 Mini Bid Round and 2024 Licensing Round.
The move is part of the regulator’s drive to ensure that licensed oil and gas acreages are actively developed and contribute to increased petroleum production.
NUPRC Sets Out ‘Drill-or-Drop’ Rule
The NUPRC said a petroleum prospecting licence comes with specific statutory and contractual obligations, including the execution of an approved work programme within the prescribed period.
Under the PIA, the Commission said acreage is granted to be worked, where the required work is not carried out within the licence term, the acreage can return to the Federal Government.
The regulator said it intends to enforce the provisions against all non-performing acreage, with possible enforcement measures to include refusing an extension, requiring relinquishment of acreage, calling in work-performance security and commencing revocation proceedings.
Despite the warning, the Commission stressed that the objective is not simply to cancel licences. “The Commission’s objective is to increase production, not forfeiture,” the circular stated.
The NUPRC acknowledged that some operators may face legitimate challenges affecting their ability to meet their commitments. These include financing constraints, rig availability, insecurity, host-community engagement, infrastructure, regulatory approvals and partner arrangements.
The Commission said it is willing, within the limits of the law, to assist licensees in addressing such obstacles.
Licence Holders Given October 31 Deadline
Affected licence holders experiencing operational constraints have been given until October 31, 2026, to provide the NUPRC with details of their compliance status.
They must also identify the specific challenges affecting their operations and submit proposed mitigation measures and revised implementation timelines.
The regulator, however, warned that engagement with the Commission will not suspend a licence term or excuse a company from fulfilling its obligations.
It also said internal disputes between partners would not constitute a shield against enforcement. Why the Move Matters
The latest action reinforces the NUPRC’s broader push for performance-based acreage management.
In March 2026, the Commission said the era of companies holding prospecting licences without developing their assets was over, citing the PIA’s drill-or-drop framework.
The regulator has also linked the policy to efforts to attract investment, increase exploration and ultimately grow Nigeria’s petroleum reserves and production.
In July, after the 2025 Licensing Round, the NUPRC similarly warned successful bidders to develop their awarded assets or risk losing them under the drill-or-drop provision.
The latest circular therefore puts existing licence holders on notice that an awarded acreage is not simply an asset to hold; it carries obligations to invest, explore and develop it within the prescribed period.
For the affected companies, the immediate deadline is October 31. For the regulator, the broader test will be whether enforcement translates dormant or underperforming acreage into actual exploration, development and production.
