The federal government has called on International Oil Companies (IOCs) operating in Nigeria to ensure development and utilization of their assets, as it disclose plans to begin implementing the drill or drop provisions of the Petroleum Industry Act (PIA) where necessary.
Heineken Lokpobiri, minister of Petroleum Resources (Oil), stated this at the Cross Industry Group (CIG) meeting organized by IOCs operating in Nigeria, held in Florence, Italy.
According to Lokpobiri, industry players are expected to explore collaborative measures such as shared resources for contiguous assets, farm-outs, and the release of underutilized assets to operators ready to invest in production.
“We cannot continue to have assets sitting idle for 20 to 30 years without development. If you are not utilizing an asset and it remains underdeveloped for decades, it neither adds value to your books nor to us as a country.
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“We encourage industry players to explore collaborative measures such as shared resources for contiguous assets, farm-outs, and the release of underutilized assets to operators ready to invest in production. Otherwise, like any responsible government, we will take back these assets and allocate them to those willing to go to work,” he said in a statement issued to journalists on Tuesday.
The Minister urged operators to consider farm-out agreements where assets are close to existing infrastructure, rather than incurring high costs on new Floating Production Storage and Offloading (FPSO) units.
Lokpobiri also noted that while IOCs have pointed to Engineering, Procurement, and Construction (EPC) contractors as a challenge, EPCs will only commit when they see strong investment decisions from industry players.
“The Government has done its part by providing the requisite and investment-friendly fiscal policies, including the President’s Executive Order incentivizing deepwater investments. Now, the ball is in the court of the IOCs and other operators to make strategic investment decisions that will drive increased production and sustainability in the sector.
