Nigeria has slashed the entry fees for companies seeking oil blocks in its 2025 licensing round, reducing signature bonuses to as low as US$3 million as it steps up efforts to revive investment in its struggling upstream sector.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) said the downward revision, approved by the petroleum minister, aims to lower financial barriers and draw a wider pool of bidders at a time when global competition for exploration dollars is intensifying.
“Interested in one of the oil blocks listed for the 2025 licensing round? The Nigerian government has graciously reduced the signature bonus to between US$3 million and US$7 million,” the commission announced in an update posted on its website. All bidders must submit bids within this range, it said.
Signature bonuses upfront, non-refundable payments due upon the signing of oil or gas exploration agreements are a significant revenue source for the government but have long been criticised by investors as excessively high compared with other jurisdictions. Industry analysts say Nigeria’s reductions mark one of the most aggressive moves in years to improve competitiveness, particularly as dwindling investment threatens Africa’s largest oil producer.
The move follows a drastic cut in 2024, when signature bonuses were reduced from around US$200 million to US$10 million. NUPRC chief executive Gbenga Komolafe said at the time that the government benchmarked Nigeria’s fees against countries such as Brazil, prompting a rethink to avoid scaring off capital.
Under the new structure, deepwater assets will attract a maximum signature bonus of US$7 million, down from the previous US$10 million, while shallow-water and onshore assets are set between US$3 million and $7 million. The regulator stressed that payments cannot be made in naira. “The designated signature bonus account is United States dollar-denominated,” it said.
The 2025 licensing round covers 50 blocks across onshore, shallow water and deep offshore areas. Winners will receive Petroleum Prospecting Licences (PPLs), granting exclusive rights to drill exploration and appraisal wells, as well as non-exclusive rights to undertake exploration activities within the licensed area. Licensees may also extract and dispose of hydrocarbons recovered during test production phases.
Each licence carries an initial duration of three years for onshore and shallow-water zones, with a possible three-year extension. Deepwater and frontier acreage will have an initial term of five years.
More Read
The NUPRC said the bidding will follow a two-stage structure a qualification phase and a bid phase. During the qualification stage, companies or consortia must submit detailed applications demonstrating technical and financial capacity, in line with regulatory guidelines. Only shortlisted applicants will advance to the bid stage and must sign a confidentiality agreement before proceeding.
At the bid stage, qualified companies will submit both technical and commercial proposals. The commission will evaluate bids based on criteria outlined in the regulations and any supplementary documents issued.
The regulator also imposed strict limits on how many assets each bidder can pursue. No company or consortium may apply for more than two blocks in total. Firms with equity, direct or indirect ownership, or management ties to multiple consortia will have all their applications aggregated and treated as a single bid. “Participation in more than one consortium shall count towards this limit,” it warned.
More on Nigeria’s Oil Industry
Nigeria, which relies on oil for roughly 70 percent of government revenue and over 80 percent of export earnings, has struggled to attract fresh exploration investment in the past decade. Crude output has slumped from a peak of more than 2 million barrels per day to levels often below 1.5 million bpd, undermined by pipeline vandalism, theft, regulatory uncertainty and ageing infrastructure.
Although the landmark Petroleum Industry Act (PIA) was enacted in 2021 to overhaul the sector, investment inflows have remained sluggish as companies shift focus to lower-carbon assets and more stable jurisdictions. Nigeria has launched several licensing rounds since 2020, but participation has been limited compared with earlier decades when major international oil companies dominated exploration bidding.
The government hopes the reduced signature bonuses combined with cleaner fiscal terms under the PIA will revive exploration, boost reserves and raise desperately needed revenue. But analysts caution that fiscal incentives alone may not be enough unless Nigeria addresses security challenges in the Niger Delta and accelerates reforms to improve contract sanctity.
More Read
Still, officials say the 2025 round could attract a mix of local independents and smaller foreign explorers seeking frontier acreage. The NUPRC said the streamlined process and lower entry costs reflect its commitment to creating a more “competitive and investor-friendly business environment” for the upstream sector.
