To reach a target of 3 million barrels per day in crude oil production, the House of Representatives has initiated efforts to amend the Petroleum Industry Act, which would require non-producing oil wells to forfeit their operational licenses.
The first reading bill passed by the House of Representative on September 26, 2024 is “A bill for an Act to amend the Petroleum Industry Act, 2021 to provide for licensing requirements for the operation of oil wells, petroleum prospecting licenses and, for revocation of licenses from non-performing oil fields and for related matters.”
The bill, sponsored by Ikenga Ugochinyere, the representative for the Ideato North/Ideato South Federal Constituency in Imo State, is anticipated to return to the floor of the Green Chambers in the coming weeks.
The proposed legislation aims to amend Section 81 by adding new sub-sections 2 and 3. Sub-section 2 outlines the licensing requirements for petroleum mining leases, stating that.
“A petroleum mining lease shall be granted under sub-section 1 of this section where the holder of a petroleum prospecting licence shows a minimum crude oil refining capacity of 50,000 barrels per day.”
The amendment in sub-section 2(a) allows licensees with little refining capacity to come together to operate.
“Any petroleum prospecting licensee without the minimum crude oil refining capacity specified in this section may form a consortium consisting of not more than five licensees and such a consortium shall be granted a license for the field.”
Sub-section 2 (b) of the bill powers the Nigerian Upstream Petroleum Regulatory Commission to provide the framework for the operations of such company consortiums.
The bill in sub-section 3 provides that “Where a licensee fails to produce the required capacity of crude oil for a continuous period of two years, the commission shall revoke the licence of that licensee. This provision shall also apply to the consortium under sub-section 2.”
The bill further clarified what constitutes a non-producing oil field.
“In this section (3a), an oil field shall be considered non-producing if there has been no crude oil production, reinjection for storage, or any other approved operational activity from that oil field over a continuous two-year
period.
3(b) provides that “The commission shall prescribe regulations and guidelines for monitoring oil well performance, criteria for determining non-performance, notification procedures prior to revocation, and the revocation process under this section.”
