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Amid growing concerns over revenue losses in Nigeria’s oil sector, the Federal Government is contemplating revoking licenses for dormant oil wells. This drastic measure comes in response to the staggering $30 billion loss attributed to underutilized or abandoned oil assets.
The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, disclosed this on Monday evening at an event held in Lagos by The Petroleum Club.
According to the minister, Nigeria has lost about $30bn to low oil production in the past two and half years.
According to recent data, a significant number of oil wells across various oil-producing regions in Nigeria remain inactive, contributing to the substantial financial shortfall.
Lokpobiri said, “For the past two and a half years, oil has been hovering around $80 per barrel. 480,000bpd, multiply it by two and a half years, it will give you about $34bn. When I was on the table, I was doing a rough mathematics. If one asset was doing about 600,000 barrels; but because of the problems which we are trying to resolve, production declined to 120,000 barrels, which means we’ve lost about 480,000bpd. Multiply it by $80, every day you get about $240m; multiply it by two and half years; we are talking of over $30bn. Inject that into our economy today, the dollar will naturally drop. This exchange rate is a matter of demand and supply”.
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Lokpobiri maintained that his target was to ensure the country ramped up production through investments and grow revenue, stressing that was the mandate given to him by President Bola Tinubu.
He said, “One of the things we want to do to ramp up production is to see that any well that is idle has to be allocated to people. The Petroleum Industry Act gives the opportunity that any well that hasn’t been used in the past few years could be farmed out and be given to people who have proven capacity to do exploration so that we can boost production.
“I am engaging stakeholders, the IOCs, the Nigerian National Petroleum Company Limited to say, ‘Look, if you have a multiplicity of oil wells and you are not using them, we will apply the law’
“One of the reasons why our production is low is because we have too many shut wells, some of them contiguous to our marginal fields or oil wells. But by the time we take those wells in line with the law and give you people, and we give a timeline upon which you must produce, we will be able to increase production.”
The proposed revocation of licenses for unused oil wells aims to incentivize operators to either reactivate dormant wells or relinquish them for reallocation to companies willing to exploit them fully. This move aligns with the government’s broader agenda to optimize Nigeria’s oil sector and mitigate revenue losses.
The decision to revoke unused oil well licenses underscores the Federal Government’s commitment to promoting accountability, efficiency, and sustainability in the management of Nigeria’s oil resources. As Africa’s largest oil producer, Nigeria has a responsibility to harness its energy potential for the benefit of its citizens and future generations.
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