Nigeria’s Upstream Sector Enters “Drill or Drop” Era as 2025 Oil Licensing Round Attracts Strong Investor Interest
Nigeria’s upstream petroleum sector is witnessing a significant regulatory shift, as the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) implements new measures under the Petroleum Industry Act (PIA) aimed at ending the long-standing practice of oil companies holding onto exploration licences without developing them.
Oritsemeyiwa Eyesan, Chief Executive of the NUPRC, emphasized that the era of dormant oil blocks is officially over. Speaking during a meeting with a delegation from the Petroleum Directorate of Sierra Leone at the commission’s headquarters in Abuja, Eyesan highlighted the transformative impact of the PIA’s “drill or drop” provisions on exploration licence management.
“The drill or drop provision under Section 94 compels operators to either commence exploration and development activities within a specified timeframe or surrender the licence to the government,” Eyesan said. “This reform has eliminated decades of asset hoarding, ensuring that licences are allocated to companies genuinely ready to invest.”
Investor Confidence on the Rise
The announcement comes amid the ongoing 2025 oil licensing round, which has attracted notable interest from both local and international investors. Despite stricter bidding rules limiting companies to a maximum of two blocks, Eyesan described the level of participation as “encouraging,” signaling renewed confidence in Nigeria’s upstream sector following regulatory reforms.
“For the 2025 licensing round, we have 50 oil blocks on offer. The pre-qualification submissions clearly demonstrate that investors see Nigeria as a viable and attractive investment destination,” Eyesan explained.
The commission deliberately introduced bidding restrictions to prevent asset hoarding and promote wider participation. In addition, NUPRC engaged an independent audit firm to review the digital bidding system, ensuring transparency and integrity throughout the process. “The results of this validation will be made public to further boost investor confidence,” she added.
Unlocking Dormant Assets
Historically, some companies retained prospecting licences for up to 20 years without carrying out meaningful exploration, slowing Nigeria’s efforts to expand its petroleum reserves. The new “drill or drop” framework has returned many dormant assets to the government’s portfolio, creating new opportunities for investors in the current licensing round.
“Now, we have more assets available, giving us the impetus to consider holding bid rounds more frequently, possibly even annually,” Eyesan said.
Regional Cooperation and Knowledge Sharing
During the Abuja meeting, Foday Mansaray, Director-General of the Petroleum Directorate of Sierra Leone, emphasized the importance of learning from Nigeria’s regulatory experience.
“We are here to collaborate with the NUPRC and gain insights from Nigeria, our big brothers in the industry,” Mansaray said. “We are ambitious despite being a smaller country, and there is much we can learn from Nigeria’s governance framework.”
He also proposed the signing of a Memorandum of Understanding to strengthen bilateral cooperation in regulatory capacity building and petroleum sector development.
Details of the 2025 Licensing Round
Launched in December 2025 following approval by President Bola Tinubu, the 2025 licensing round offers 50 oil and gas blocks across major sedimentary basins, including the Niger Delta, Anambra, Bida, Benue Trough, and Chad basins. The round is designed to boost exploration, increase reserves, and support long-term crude production growth.
The process has completed the pre-qualification stage, which closed on February 27, 2026. Qualified companies will now proceed to technical and commercial bidding, with the entire exercise expected to conclude in July 2026 after the commercial bid conference and final approvals.
The PIA’s reforms, coupled with the licensing round, are part of Nigeria’s broader strategy to revive upstream activity, attract fresh investment, and strengthen the regulatory framework—key steps toward securing the country’s position as one of Africa’s leading hydrocarbon producers.