5 Key Things to Note About Nigeria’s New Oil Licensing Round
Nigeria has formally launched its 2025 Oil and Gas Licensing Round, offering 50 oil and gas blocks across five sedimentary basins. Beyond the investment headlines, the exercise is firmly anchored in the Petroleum Industry Act (PIA) 2021, which governs the structure, eligibility requirements, and evaluation criteria for petroleum licensing in Nigeria.
- Statutory Authority of the NUPRC
The licensing round is conducted pursuant to Sections 73–75 of the PIA 2021, which vest the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) with statutory authority to conduct petroleum licensing rounds and pre-qualify applicants. The Act requires the process to be competitive, transparent, and based on clearly defined criteria, limiting regulatory discretion and reinforcing compliance with the rule of law. The opening of 50 blocks across multiple sedimentary basins reflects the Commission’s exercise of this statutory mandate.
- Mandatory Pre-Qualification Requirements
Under Section 75 of the PIA, prospective bidders must demonstrate technical competence, financial capacity, and relevant experience in upstream petroleum operations before being admitted into the bid process. In line with this provision, the NUPRC’s pre-qualification stage screens out speculative entities, allowing only firms with credible operational and financial structures to proceed.
- Work Programme and Performance Security Obligations
Sections 77 and 78 of the PIA require applicants to submit detailed exploration and development work programmes, supported by performance guarantees to ensure execution. In the 2025 round, this is reflected in the requirement for bidders to outline exploration plans within the initial exploration period, being three years for onshore assets and five years for deepwater and frontier blocks and to provide a minimum work performance security of 1%, reinforcing enforceability under the Act
- Commercial Terms and Signature Bonus Structure
Pursuant to Section 76 of the PIA, commercial bids form part of the licensing evaluation but are not the sole determinant of success. Reflecting this, the 2025 round adopts a controlled signature bonus range of $3m–$7m, which is a major drop from the $10 million required in 2024, and far below the roughly $200 million demanded in previous years. This reflects a shift in emphasis from aggressive cash bids to technical capability, financial strength, and speed to production, in line with global investment realities.
- Transparency, Digitalisation and Oversight Mechanisms
The PIA mandates openness and accountability in upstream petroleum operations. Consistent with this, the NUPRC has deployed digital bidding platforms, ensured public access to licensing materials, and subjected the process to oversight by bodies such as NEITI, reinforcing compliance with Sections 83 and related transparency provisions of the Act.
Nigeria’s 2025 Licensing Round demonstrates a clear shift from discretionary awards to a statutorily driven licensing regime under the PIA 2021. For prospective participants, the message is unambiguous: only entities that satisfy the Act’s technical, financial, and operational requirements can compete in Nigeria’s re-engineered upstream petroleum sector.
