By: OrePulse

Nigeria's Upstream Petroleum Regulatory Commission (NUPRC) is taking a fresh look at how it vets and approves companies bidding for oil block licenses, following comments from the agency's chief executive acknowledging that some operators granted acreage in earlier licensing rounds didn't have the financial resources or technical expertise needed actually to develop what they'd been awarded.

NUPRC chief executive Oritsemeyiwa Eyesan revealed this review effort during a September 11 visit to an anti-corruption body, explaining that some operators lacked the financial or technical capability to bring their awarded assets into production, while other projects had stalled due to ongoing disputes.

This isn't a new problem — Nigeria has spent more than 20 years struggling to match dormant petroleum acreage with investors, especially smaller domestic companies, who actually have the capacity to develop it. Consider the 2003 marginal-field licensing round, which handed out 24 fields to a group of 31 companies. By 2013, only eight of those fields were actually producing oil. While 13 eventually reached first production, 11 of the original license awards were revoked entirely.

A 2013 assessment by Nigeria's Department of Petroleum Resources painted an even starker picture: of 77 blocks awarded between 2005 and 2007, only one had reached production, and fewer than 30% of the total blocks saw any active development work at all. Regulators at the time pointed to financing shortfalls, technical limitations, partnership conflicts, and security concerns as the primary roadblocks.

The pattern continued into the next major licensing round. A 2020 marginal-field exercise attracted 665 interested parties competing for just 57 available fields, ultimately narrowing down to 161 potential awardees. Yet by January 2022, 33 of those provisional awards still hadn't paid their signature bonuses. In several cases, multiple companies had been assigned to the same field—creating governance headaches that further slowed development. Ownership disputes haven't gone away either: a legal battle spanning 2025 and 2026 between Gab & Nuella Concept, Brinitup Hydrocarbons and NorthWest Petroleum over the Ede marginal field shows how these conflicts can hold up development before any work even starts.

Industry analysis firm Wood Mackenzie has projected that the 25 largest oilfields included in the 2020 round could collectively attract around $9.4 billion in investment within their first five years of operation. The firm also identified 22 fields with the potential to deliver returns exceeding 20%, though these still required upfront capital investment of up to $200 million before reaching first production — a bar that has proven too high for some smaller companies awarded these fields. Emadeb Petroleum Exploration & Production offers a real-world example of how much investment this can demand: bringing the Ibom field, originally discovered in 1979, into production required more than $100 million and decades of work, with oil finally flowing in October 2025.

To address this recurring cycle of stalled awards, Nigeria's 2025 licensing round introduced considerably tougher qualification standards. Applicants for onshore and shallow-water blocks must now demonstrate at least $40 million in verifiable financial capacity, while those pursuing deep-offshore acreage need to show a minimum of $100 million. Signature bonuses under this newer round range from $3 million to $7 million, and successful bidders now face a strict 60-day window to pay their signature bonus, plus a 90-day deadline to finalize guarantees and other required paperwork.

According to NUPRC's own estimates, petroleum prospecting licenses issued through the 2020 round could eventually contribute roughly 58,000 barrels per day of additional oil production, along with 87 million standard cubic feet per day of gas — representing about 3.9% of Nigeria's total crude output, which stood at 1.5 million barrels per day as of August 2026. Given that crude oil and related petroleum products made up approximately 86.2% of Nigeria's total goods exports in the second quarter of 2026, the stakes of successfully developing this undeveloped acreage are substantial.

Going forward, NUPRC says it's adopting what it calls a "drill or drop" philosophy, grounded in Section 79 of the Petroleum Industry Act. That provision requires any license holder that declares a commercial discovery to submit a formal field development plan within two years, or risk having the acreage taken back. The regulator is also planning an onboarding program in October specifically for companies awarded blocks in the 2025 round, which will notably include input from the anti-corruption agency on matters of governance and compliance. Separately, NUPRC expects to launch its 2026 licensing round in early October, reintroducing 13 blocks that went unclaimed in the previous round.