The Federal Government could generate about N353 billion from signature bonuses payable by successful bidders in the 2025 oil block licensing round, despite significantly reducing the mandatory entry fees to encourage greater investment in Nigeria’s upstream petroleum sector.

The estimate is based on the Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC) revised signature bonus of between $3 million and $7 million per block, replacing the flat $10 million charge imposed during the 2024 licensing round.

The reduction, contained in the Commission’s “Frequently Asked Questions (FAQs) on the NUPRC 2025 Licensing Round” released in December, 2025, represents a cut of between 30 per cent and 70 per cent from the previous fee structure.

According to the document, “The Nigerian government has graciously reduced the signature bonus to between $3 million and $7 million.”

The signature bonus is a one-time, non-refundable payment made by successful oil companies to the government as consideration for the right to commercially develop an awarded oil block.

If a signature bonus of $7million is paid on each of the 37 blocks, that would amount to $259million which is equivalent to N353.4billion at the current exchange rate.

The lower fees, according to experts, are expected to make Nigeria’s licensing regime more competitive, improve investor participation and accelerate exploration activities, particularly in frontier basins that have historically attracted limited investment.

The 2025 licensing round recorded strong investor interest, with 143 companies submitting 200 bids for 37 of the 50 oil and gas blocks offered by the Federal Government.

The available acreage covered diverse geological terrains, including 16 Niger Delta Onshore blocks, 18 Niger Delta Shallow Water blocks, one Deep Offshore block, three Benin Basin Onshore blocks, four Anambra Basin Onshore blocks, four Chad Basin Onshore blocks and four Benue Trough blocks.

Out of the 50 blocks placed on offer, 37 attracted bids while 13 received no applications.

Successful companies in the licensing exercise include SSonic Petroleum Limited, CFP Pipeline and Flowlines, Dutchford E&P Limited, Attabanson Global Company Limited, Rosem Energy Limited, Pivot-GIS Limited, Network E&P, Asharami, LexOil, BVOF, Gupsco Energy Limited, Saratoga, Volante, Concept-Reel Petroleum Services Limited, Clinton Oil Field and Nuway Oaklane Limited.

Others are Ramec, Italia, Blueridge E&P, Up Energies Limited, AYM Shafa, Blackrock Holdings Limited, Funtay Integrated Business Limited, Riparian Development and Production Limited, Nikstallis, Stardeep Petroleum, Dakoda & U Limited, Southborne Oil and Gas Limited, Lanaka Petroleum, Highban Resources Limited and Eyre Energy Limited.

Oil and gas industry analyst, Prof. Wumi Iledare described the FG’s decision to slash signature bonus “as a well-calibrated fiscal incentive.”

According to him, the emergence of new winners in the recent hydrocarbon licensing round underscores the importance of lowering upfront entry costs to improve investment attractiveness and defer government rent extraction until commercial success is achieved.

“Investors bid for commercial opportunities, not merely geological prospects. There is a critical distinction between the chance of geological success (recoverability) and the chance of commercial success (commerciality). At the licensing stage, it is commerciality—not geology alone—that ultimately drives investment decisions.

“Reducing the signature bonus makes the fiscal regime less regressive by lowering the upfront financial burden on investors. Consequently, key investment metrics—such as Net Present Value (NPV), Internal Rate of Return (IRR), and Value Investment Ratio (VIR)—improve, enhancing the economic viability of exploration projects,” said Professor Emeritus of Petroleum Economics. (Daily Trust)

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