Why companies may lose 2025 licensing bids – NUPRC

The commencement of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) 2025 Licensing Round has sparked significant interest, offering 50 oil and gas blocks across onshore, swamp/shallow water and offshore terrains spanning diverse basins.

While the government has taken steps to lower entry barriers by reducing the signature bonus range to between $3 million and $7 million, the regulator is simultaneously imposing a set of compliance and financial standards for bidders.

The NUPRC last week, announced the commencement of the Nigeria 2025 licensing round, stating that the Nigerian government expects to attract about $10 billion in investments through the licensing round. It is also expected to add up to 2 billion barrels of oil output over the next 10 years with an estimated 400,000 barrels/day of production volumes when the blocks are fully operational.

Read also: Local operators now accounts for over 30% of Nigeria’s oil production – NUPRC

However, according to the Commission in a document release on Monday, applicants may be disqualified at any time, if it or any of its members are indebted to the Government or has not operated a previously awarded licence or lease vigorously and in a business-like manner in accordance with applicable laws.

It also explained that if an applicant becomes insolvent, has not or does not comply with applicable laws, such may be disqualified.

The exercise according to the NUPRC is open and non discriminatory to both local and foreign companies. It stated that, “A foreign company does not need to register in Nigeria to participate in the bid but the PPL shall only be awarded after such a company has been duly registered under the Companies and Allied Matters Act (CAMA) as stipulated in the PIA.

“All Bidders shall be required to submit a bid within a range of $3 million and $7 million as approved by the minister of petroleum for the reduction of entry barriers. Bids submitted below the Prescribed Range shall be deemed non-compliant and shall not be evaluated.”

It also noted that where two or more bidders submit matching highest bids for a block within the prescribed range (“Competing Bids”), such bids shall be subject to a tie-breaking process. “The sole tie-breaking Process shall be the submission of a sealed re-bid of the signature bonus, which may be higher than the prescribed range.”

“No bidder, whether participating individually or as a member of any consortium, shall submit applications for more than two (2) assets in total across all applications. Participation in more than one consortium shall count towards this limit.

“For the avoidance of doubt, where a company has equity, direct or indirect ownership, or management involvement in multiple consortium vehicles, all such applications shall be aggregated and treated as a single bidder’s applications,” the Commission stated.

The Commission also set the minimum financial requirement for an entity to participate in the licensing round to include: an average annual turnover of $100 million for deep offshore blocks and $40 million for onshore and shallow water blocks or minimum cash in bank of $100million for deep offshore blocks and $40 for onshore and shallow water blocks or a bank guarantee of same amount.

Also, a newly incorporated company would require a parent company guarantee to the tune of $100 million in deep offshore, $40 million in onshore and shallow water.

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