The Federal Government has significantly reduced the signature bonus required for the 2025 licensing round. This fee, paid by companies to acquire oil blocks, has been lowered from $10 million to a range of $3 million to $7 million.
This major reduction is part of the government’s strategy to reduce financial barriers for investors in Nigeria’s upstream petroleum sector.
Details of the New Signature Bonus
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) confirmed the new rates on its official website. Previously, the government had already cut the bonus from approximately $200 million to $10 million in 2024.
A signature bonus is a compulsory, non-refundable payment made upon signing an agreement for an oil or gas asset. The new fee structure is differentiated by asset type:
- Deepwater Assets: Now subject to a minimum of $7 million.
- Shallow Water and Onshore Assets: Now subject to a minimum of $3 million.
The NUPRC clarified that all signature bonuses must be paid in United States dollars.
The 2025 Licensing Round Process
The NUPRC has listed 50 blocks available for bidding. These assets cover onshore, shallow water, and deep offshore areas. The regulator has adopted a two-stage bidding process for the awards:
- Qualification Stage: Applicants submit their information for evaluation. Only shortlisted, qualified applicants proceed.
- Bid Stage: Shortlisted applicants submit their technical and commercial bids.
The regulator imposed a strict limit: No single bidder (individual or consortium member) is permitted to submit applications for more than two assets in total.
Award Rights and Duration
Winners will be granted a Petroleum Prospecting Licence (PPL). This licence gives the holder exclusive rights to drill exploration and appraisal wells, as well as the right to dispose of any crude oil or natural gas extracted during production tests.
The licence duration is set as follows:
- Onshore and Shallow Waters: An initial duration of three years, with a possible extension of another three years.
- Deep Water and Frontier: An initial duration of five years.
The NUPRC stressed that payment providers must connect to the new Revenue Optimisation Platform to harmonize government collections.
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