FG reduces oil block entry costs to $3m

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As the 2025 licensing round gets underway, the Federal Government has reduced the signature bonus from $10m to $3m and $7m. The Nigerian Upstream Petroleum Regulatory Commission disclosed this in an update on its website.

According to the commission, this was part of the government’s efforts to reduce entry barriers. “Interested in one of the oil blocks listed for the 2025 Licensing Round? The Nigerian government has graciously reduced the signature bonus to between $3m and $7m.

“All bidders shall be required to submit a bid within a range of $3m and $7m as approved by the minister of petroleum for the reduction of entry barriers,” the commission said.

The PUNCH recalls that in 2024, the government slashed the signature bonus payable by successful bidders from around $200m to $10m. The Chief Executive of the Nigerian Upstream Regulatory Commission, Gbenga Komolafe, stated that the NUPRC surveyed what other countries like Brazil demand as signature bonuses from would-be investors and discovered the need to slash that of Nigeria.

A signature bonus is a non-refundable payment made by a contractor to the government upon the signing of an agreement. Firms who are awarded oil or gas sassets are expected to pay signature bonuses to the government.

The NUPRC disclosed last year that an investment in deepwater would attract $10m as a signature bonus, while shallow water and onshore attract $7m. It appears the figures have been reduced further to $7m and $3m, respectively.

It was added that the signature bonus cannot be paid in naira. “The designated signature bonus account is United States dollar-denominated,” the NUPRC mentioned.

The regulator stated that the winners of this licensing round will be awarded a Petroleum Prospecting Licence, which confers to the holder the exclusive right to drill exploration and appraisal wells; the non-exclusive right to carry out petroleum exploration operations within the area provided for in the licence; and the right to carry away and dispose of crude oil or natural gas won or extracted during the drilling of exploration or appraisal wells as a result of production tests.

It clarified that the licence is for “an initial duration of three years, with a possible extension of another three years for onshore and shallow waters, while it is five years for deep water and frontier.”

The commission disclosed that it has adopted a two-stage bidding process for the award of the blocks, saying the bidding process shall comprise a qualification stage and a bid stage.

“The qualification stage involves the submission and evaluation of applications by interested parties or consortia in accordance with the Regulation and the Guidelines.

“Applicants shall provide all information required for this stage. Only applicants who are adjudged qualified and subsequently shortlisted by the commission shall proceed to the bid stage and will be required to execute a Confidentiality Agreement prior to participation.

“At the bid stage, shortlisted applicants or bidders shall submit their technical and commercial bids in accordance with the regulation, the guidelines, and any other bidding documents issued by the commission.”

The regulator warned that no bidder, whether participating individually or as a member of any consortium, shall submit applications for more than two 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 application,” it was stated.

NUPRC informed that there are 50 blocks covering the onshore, shallow water, and deep offshore areas.

“The blocks on offer are: PPL 2A29; PPL 2A30; PPL 2A31; PPL 2A32; PPL 2A33; PPL 2A34; PPL 2A35; PPL 2A36; PPL 2A37; PPL 2A38; PPL 2A39; PPL 2A40; PPL 2A41; PPL 2A42; PPL 2A43; PPL 2A44; PPL 2A45; PPL 2A46; PPL 2A47; PPL 2A48; PPL 2A49; PPL 2A50; PPL 2A51; PPL 2A52; PPL 2A53; PPL 2A54; PPL 2A55; PPL 2A56; PPL 2A57; PPL 2A58; PPL 2A59; PPL 2A60; PPL 2A61; PPL 2A62; PPL 2010; and PPL 307.”

Others are “PPL 308; PPL 309; PPL 900; PPL 901; PPL 902; PPL 903; PPL 700; PPL 701; PPL 702; PPL 703; PPL 800; PPL 801; PPL 802; and PPL 803.”

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