Introduction

The Federal Government of Nigeria (“FGN”) has initiated preliminary steps for the 2024 petroleum licensing round (“Licensing Round”) through its upstream oil and gas industry regulator, the Nigerian Upstream Petroleum Regulatory Commission (“Commission”). The Commission recently announced the commencement of the Licensing Round¹, which is intended to bolster the country's oil production and revenue. The Licensing Round, offering twelve (12) selected blocks² across diverse geological formations, is expected to attract significant interest from domestic investors and international oil companies (“IOCs”) and following the calendar of events, is projected to last till January 2025³.

This recent move by the FGN is a strategic effort to stimulate investment in the sector. This initiative follows the 2022 mini-bid round, a significant event aimed at attracting investors and boosting sectoral growth. The government's actions appear to be part of a broader strategy to create a more favourable investment climate, encouraging both local and international stakeholders to participate actively in the sector. Such measures are crucial for fostering economic development and leveraging the sector's potential to contribute significantly to the nation's economy.

Fostering Investment

The success of the 2024 Licensing Round depends on the Commission’s ability to create conducive conditions for investment in the country's oil and gas sector. This responsibility is underscored by the Commission's statutory obligation to promote an enabling environment for investment in upstream petroleum operations, as mandated by the Petroleum Industry Act (“Act”)⁴.

Historically, stakeholders have been concerned about the purported increase in signature bonuses within Nigeria's oil bid process⁵. However, the Honourable Minister of State for Petroleum Resources (Oil), Mr. Heineken Lokpobiri, has addressed this issue⁶. He stated⁷ that the country has revamped the signature bonus payments required from new investors in the oil and gas sector. To ensure a smooth transition, signature bonus payments will now be tied to immediate exploration and production activities. Rather than depositing these payments into the FGN’s account, investors must demonstrate their financial capacity to proceed with exploration activities in Nigeria. It is expected that this move by the FGN will encourage more committed investments, and ultimately enhance the efficiency of oil and gas development in the country.

Investor departures have recently become a significant concern in the oil and gas industry, with IOCs progressively divesting from the country due to challenges such as complexities in engaging with host communities and rampant crude theft in the oil-rich Niger Delta. However, this shift presents an opportunity for indigenous investors to participate in the Nigerian oil and gas market.

Regarding the planned divestment of Shell Petroleum Development Company of Nigeria Limited's (“SPDC”) interests in the SPDC joint venture assets, the Commission has been actively involved in identifying a successor with the financial resources and technical expertise to manage the assets responsibly. The Commission’s Chief Executive, Engr. Gbenga Komolafe noted that through its involvement in the SPDC divestment, the Commission is emphasizing its commitment to a free entry, free exit business principle, fostering a stable regulatory framework conducive to investment⁸.

Conclusion

The Licensing Round represents a significant step toward growing the nation’s oil and gas reserves through aggressive exploration and development. It aims to boost production, expand opportunities for gas utilization, and foster end-to-end development across the value chain. Additionally, it seeks to strengthen energy security and the economy, engage competent companies in the sector, create employment opportunities, enable technology transfer, valorise petroleum assets, and attract investments.

Amidst the challenges surrounding the Licensing Round, the FGN, through the Commission, has assured its commitment to transparency and accountability in the oil and gas sector. There is hope that the coming days will bring positive developments. As industry stakeholders closely monitor the Commission’s actions regarding the Licensing Round, it is prudent for interested investors to seek expert guidance and representation as they navigate the guidelines⁹ and next steps recently published by the Commission.

1. NUPRC, Announcement of Commencement of the 2024 Nigeria Petroleum Licensing Round and Resumption of 2022/2023 Mini Bid Round (May 2024) retrieved from 2024 licensing round, www.nuprc.gov.ng accessed 22 May 2024.
2. The twelve (12) selected blocks specifically are PPL 300-CS, PPL 301-CS, PPL 3008, PPL 3009, PPL 2001, PPL 2002, PML 51, PPL 267, PPL 268, PPL 269, PPL 270, and PPL 271.
3. The Nigerian Upstream Petroleum Regulatory Commission Nigeria, 2024 Licencing Round Guidelines (April 2024) retrieved from 2024.nuprc.gov.ng, 2024 accessed 21 May 2024.
4. Section 6(8) of the Act.
5. Oladehinde Oladipo, Tinubu’s quest for oil investment faces execution hurdles (Business Day, March 2024) retrieved from Tinubus quest for oil investments faces execution hurdle, businessday.ng accessed 08 May 2024.
6. The Cable News, Lokpobiri: Winners in 2024 marginal bid round must put oilfields to immediate use retrieved from lokpobiri winners in 2024 marginal bid round must put oilfields to immediate use, www.thecable.ng accessed 08 May 2024.
7. The Minister made this statement at the ongoing Offshore Technology Conference in Houston, Texas on Monday 06 May 2024, retrieved from how investment can be attracted into petroleum industry lokpobiri, www.vanguardngr.com, May 2025 accessed 08 May 2024.
8. Nigerian Upstream Petroleum Regulatory Commission, NUPRC Holds Due Diligence Workshop on Proposed Divestment Of Shell Petroleum Development Company’s Assets (April 2024) retrieved from NURPC holds due diligence workshop on proposed divestment of shell petroleum development company's assets, www.nuprc.gov.ng accessed 08 May 2024.
9. Ibid,3.