Nigeria’s 2025 Oil Licensing Round: A Transformative Path Forward 

Nigeria’s 2025 Oil Licensing Round: A Transformative Path Forward 

Introduction

On 18^th December 2024, Engr. Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (the “NUPRC” or “Commission”) announced a fresh oil licensing round for 2025 (“2025 Round”) at the 2024 Licensing Round Commercial Bid Conference (the “Conference”) in Lagos[1]. The Commission’s decision undoubtedly reflects Nigeria’s commitment to (i) optimizing its oil and gas resources (ii) addressing challenges such as declining production levels and increased global competition and (iii) restoring investors’ confidence in the oil and gas sector with a view to achieving long-term sustainability.

Perspective for the 2025 Licensing Round

Following the ongoing 2024 licensing round and building on the lessons thereon, the 2025 Round will largely prioritize (a) undeveloped and fallow oil and gas assets (b) discovered but undeveloped fields, and (c) natural gas development projects aligning with Nigeria’s commitment to the United Nations Sustainable Development Goals (“SDGs”). Notably, the underlying objective of the 2025 Round is to bring idle assets back into production, supported by the ‘drill or drop’ provision of the Petroleum Industry Act (“PIA”)[2]

The ‘drill or drop’ policy framework underpins the 2025 Round pursuant to which the Commission will reclaim idle assets from license holders who have failed to develop them. These assets will then be reintegrated into the bidding pool for the 2025 Round towards ensuring their productive and effective use. As it is typical of most licensing rounds, the Commission is expected to issue the relevant timetable for the commercial and technical submission, bid conference, relevant guidelines and other relevant information in respect of the 2025 Round. We expect that the Commission will issue the requisite information (as noted above) on its website. Accordingly, it is important for interested investors, parties and technical providers to regularly check the Commission’s website to keep abreast of any development(s) in this regard.

Conclusion

The 2025 Round’s announcement signals a proactive approach to fully utilizing Nigeria’s hydrocarbon resources for Nigeria’s economic development. With a laser focus on undeveloped and fallow assets and prioritization of natural gas, we believe that the Commission is setting the stage for a fully revitalized and revived oil and gas sector.

[1]      It is important to note that the Commission offered 12 (twelve) marginal field and 7 (seven) deep offshore blocks in the 2024 licensing round, launched in May, 2024. Notably, successful bids from 16 (sixteen) companies, including but not limited to TotalEnergies EP Nigeria Limited, MRS Oil & Gas Company Limited, First E&P Development Company Limited, and Sahara Deepwater Resources Limited.

[2]        Pertinently, the PIA clearly mandates oil and gas license holders to actively develop their assigned fields or otherwise relinquish them back to the Federal Government of Nigeria or for reassignment to other interested parties.