By Ese Ufuoma
Nigeria, Africa’s largest oil producer, boasts vast hydrocarbon reserves, yet a significant number of its oil blocks remain idle. This underutilisation represents not just a missed economic opportunity but also a symptom of deeper structural challenges within the country’s energy sector. In early 2025, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported that over 50% of the country’s awarded oil blocks are inactive, with some remaining undeveloped for decades. This dormancy translates to substantial losses in potential revenue, employment opportunities, and energy security.
Meanwhile, the Federal Government has threatened to withdraw the licences of oil blocks, which the owners have failed to develop and have been dormant for decades.
The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, gave the warning at a Cross Industry Group meeting held in Florence, Italy, organised by International Oil Companies (IOCs) operating in Nigeria. Several factors contribute to the inactivity of these oil blocks:
Financial and Technical Constraints: Many indigenous companies awarded licences lack the necessary capital and technical expertise to develop these assets.
Security Concerns: Persistent insecurity in oil-producing regions, particularly the Niger Delta, deters investment and hampers operations.
Regulatory Challenges: Despite the enactment of the Petroleum Industry Act (PIA) in 2021, inconsistent implementation and bureaucratic hurdles continue to create an unpredictable investment climate.
Legal Disputes: Ownership conflicts and litigation over certain blocks stall development efforts.
Global Energy Transition: The shift towards renewable energy sources has led some investors to reconsider long-term commitments to fossil fuel projects.
In response to these challenges, the Nigerian government has initiated several measures:
License Revocation Threats: The Federal Government has warned that licenses for underutilised oil blocks may be revoked if operators fail to develop them promptly.
Third-Party Operators: The Nigerian National Petroleum Company Limited (NNPC) advocates for the involvement of third-party operators to develop idle assets, ensuring that resources do not remain untapped due to the original license holders’ constraints.
Licensing Rounds: Plans are underway to auction undeveloped oil and gas blocks in 2025, aiming to attract investors with the capacity to develop these resources.
Industry Perspectives
Dr. Victor Ekpenyong, CEO of Kenyon International West Africa Ltd., emphasises the importance of reviving idle wells to boost oil production and meet OPEC quotas. He states, “Leveraging existing oil reserves is crucial for Nigeria to enhance its production capacity and revenue generation.”
Similarly, Udobong Ntia, Executive Vice President of Upstream at NNPC, highlights the need for collaboration: “There’s no point in holding onto an asset if you don’t have the capital or aren’t ready to produce. Bringing in third-party operators can help bring these fields into production.”
Private Sector Engagement
Seplat Energy, a leading indigenous oil and gas company, has announced plans to revive 400 idle oil wells, targeting an increase in production to over 120,000 barrels per day in the coming months. This initiative demonstrates the potential for private sector involvement in revitalising Nigeria’s oil production.
The prevalence of idle oil blocks in Nigeria underscores the need for comprehensive reforms and strategic partnerships. By addressing financial, technical, and regulatory challenges and fostering collaboration between government and industry stakeholders, Nigeria can unlock the full potential of its hydrocarbon resources, driving economic growth and energy security.