Sierra Leone has signed a petroleum licence agreement with Nigeria-based Marginal Energy Limited for offshore exploration and production rights in a deal valued at more than US$225 million, as the West African nation steps up efforts to revive its underdeveloped upstream oil and gas sector.
The agreement, announced on Thursday by the Petroleum Directorate of Sierra Leone (PDSL), grants Marginal Energy rights to explore five offshore blocks—G-145, G-146, G-147, G-160 and G-161—covering approximately 6,800 square kilometres of Atlantic waters off Sierra Leone’s coastline.
Officials said the licence was signed at the Invest in African Energy conference in Paris, where Sierra Leone has been actively courting international investors to unlock its frontier offshore basin and boost long-term energy revenues.
According to the terms of the agreement, Marginal Energy will undertake a phased exploration programme that includes seismic data acquisition, geological studies and exploratory drilling. The company has committed to spending more than US$225 million over the life of the initial exploration phase.
The Sierra Leone government will retain a 10 per cent carried interest in oil developments and a 5 per cent stake in gas projects during both exploration and production stages. It will also have the option to acquire an additional participating interest of up to 9 per cent on a paid basis once commercial production begins.
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The Petroleum Directorate said the structure was designed to attract private investment while ensuring that the state maintains a direct stake in any future discoveries.
President Julius Maada Bio welcomed the agreement, describing it as part of a broader strategy to harness the country’s natural resources to support economic transformation. According to a statement from the presidency, the deal reflects government efforts to position Sierra Leone as a credible destination for upstream investment while ensuring that national interests are protected.
Sierra Leone has long been considered a frontier exploration zone in West Africa, with limited offshore drilling activity despite several geological surveys suggesting potential hydrocarbon reserves in its maritime basin. Previous exploration efforts have been sporadic, hampered by high risk perceptions, limited seismic data, and infrastructure constraints.
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The new agreement comes as the government prepares to launch a fresh offshore licensing round supported by updated seismic mapping intended to improve the quality of available geological data and increase investor confidence.
Marginal Energy, a Nigerian independent oil company, has in recent years expanded its operations beyond its domestic market, focusing on marginal fields and frontier assets across West Africa. The firm is part of a growing group of regional independents seeking opportunities in areas that are often bypassed by major international oil companies due to higher exploration risk.
Industry observers say the Sierra Leone deal underscores a broader shift in Africa’s energy landscape, where intra-African partnerships are becoming more prominent as regional firms take on a larger role in exploration and production activities.
However, analysts caution that the success of the project will depend heavily on exploration results, global oil price trends, and the stability of the regulatory environment. Offshore frontier exploration is inherently high-risk, with no guarantee of commercial discoveries despite significant upfront investment.
For Sierra Leone, which remains heavily reliant on mining and agriculture for foreign exchange earnings, a successful oil discovery could significantly alter its economic outlook. The government has repeatedly stated its ambition to diversify revenue sources and reduce vulnerability to commodity price shocks.
At the same time, experts note that even if commercially viable reserves are discovered, it could take several years before production begins, given the time required for appraisal, development planning and infrastructure build-out.
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The agreement is being viewed by policymakers as an important step in repositioning Sierra Leone within the regional energy map, while also strengthening Nigeria’s role as an emerging hub for independent oil companies expanding across West Africa.
If exploration proves successful, the partnership could pave the way for increased investment flows into Sierra Leone’s offshore sector and potentially open a new chapter in the country’s energy development trajectory.
