Signature Bonuses Non-Refundable Under New Petroleum Act- Lokpobiri

The Federal Government has issued a firm warning to prospective investors participating in the 2025 oil licensing round, making it clear that any errors, miscalculations, or disappointments arising from the bidding process will be borne entirely by the companies involved. Authorities stressed that there will be no refunds of signature bonuses, bidding fees, or exchanges of awarded oil assets under any circumstances, underscoring a tougher stance as Nigeria deepens reforms in its upstream petroleum sector.

The warning was delivered by the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, at the Nigerian Upstream Petroleum Regulatory Commission’s pre-bid conference held in Lagos. The conference attracted a large turnout, both physically and online, and was organised to familiarise potential bidders with the available oil and gas assets, the applicable legal framework, and the risks inherent in the licensing process.

Lokpobiri used the platform to stress that the era of acquiring oil licences for speculative purposes, prestige, or resale has come to an end. According to him, oil and gas licences are national assets that must be actively developed to create economic value, generate revenue for the government, and support broader national development goals. He warned that the government would no longer tolerate practices where licences are acquired and held without meaningful investment or production activity.

Recalling experiences from previous bid rounds, particularly the 2020 licensing exercise, the minister said the government had been inundated with requests from winning bidders seeking refunds of their bidding fees or asking to be allocated alternative acreages when the assets they acquired failed to meet expectations. Some, he said, complained after discovering that awarded blocks contained gas rather than oil, or that the commercial prospects were not as attractive as they had assumed.

Lokpobiri emphasised that such requests have no basis in law. He explained that the Petroleum Industry Act does not provide for refunds of bidding fees or signature bonuses, nor does it allow for the exchange of assets once licences have been awarded in line with due process. According to him, once a bid is concluded and an award is made, all technical, geological, and commercial risks associated with the asset rest squarely with the bidder.

“The government has no obligation to refund bidding fees or signature bonuses because you later discover that the block contains gas instead of oil, or that it does not meet your commercial expectations,” Lokpobiri said. He added that prospective investors must conduct thorough technical and commercial evaluations before submitting bids, rather than relying on assumptions or speculative expectations.

The minister also warned against the long-standing practice of hoarding oil blocks without development, describing licences as instruments of value creation rather than personal trophies. He criticised situations where licence holders parade ownership of oil blocks for years without investing in exploration or production, noting that such behaviour deprives the country of much-needed revenue and undermines energy security.

According to Lokpobiri, the 2025 oil licensing round is firmly anchored on the Petroleum Industry Act, which mandates that petroleum prospecting licences and petroleum mining leases be awarded through transparent, competitive, and non-discriminatory processes. He said the law requires bids to be assessed based on clear financial, technical, and work programme parameters, ensuring that only serious and capable investors gain access to Nigeria’s hydrocarbon resources.

He urged companies that lack sufficient capital, technical expertise, or operational capacity to collaborate with credible partners, rather than attempting to acquire assets they cannot develop. Lokpobiri added that such partnerships would improve the quality of bids and increase the likelihood of timely development of awarded blocks. He also noted that despite the global energy transition, hydrocarbons will remain central to global energy supply for decades, making Nigeria’s oil and gas resources strategically important.

Echoing the minister’s remarks, the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Oritsemeyiwa Eyesan, highlighted the reforms introduced under the Petroleum Industry Act, which she said have eliminated practices that previously encouraged asset hoarding. According to her, the new regulatory framework empowers authorities to reclaim unused or underdeveloped blocks and re-offer them to more capable investors.

Eyesan explained that several of the assets being offered in the current licensing round were recovered from operators who failed to meet their development obligations under earlier regimes. She said the commission would no longer tolerate situations where licences are held idle for years, stressing that timely development is now a core requirement under the law.

She also announced that the Federal Government, with the approval of President Bola Tinubu, has revised signature bonuses and adjusted other fees payable before first oil, with the aim of reducing entry barriers for credible investors. According to Eyesan, the adjustments are designed to strike a balance between attracting investment and ensuring that the country derives fair value from its hydrocarbon resources.

In addition, Eyesan revealed that the commission plans to commence the 2026 oil licensing round almost immediately, running preliminary processes alongside the ongoing 2025 round to ensure continuity and maintain investor engagement. She said this approach would help sustain momentum in the upstream sector and provide a predictable pipeline of investment opportunities.

Beyond licensing, Eyesan outlined a broader reform agenda focused on accelerating oil production, improving regulatory efficiency, and strengthening hydrocarbon accountability. She said the government is targeting crude oil production of three million barrels per day by 2030, as part of efforts to boost revenue, stabilise the economy, and enhance Nigeria’s position in the global energy market.

At a separate stakeholder engagement in Lagos, Eyesan disclosed that the commission has commenced a 90-day programme aimed at fast-tracking approvals for near-ready field development plans, well interventions, rig mobilisation, and other “quick-win” projects capable of delivering early barrels. She said the initiative is intended to unlock shut-in production and bring idle assets back on stream in the shortest possible time.

According to her, the commission will also introduce quarterly progress reporting and clearer service-level timelines to improve transparency and predictability in regulatory approvals. She noted that delays in approvals have historically contributed to declining output and discouraged investment, a situation the current reforms seek to address.

Eyesan said her vision for the upstream sector is built on three core pillars: optimising production and expanding revenue, ensuring regulatory predictability and speed, and promoting safe, governed, and sustainable operations. She added that these priorities align with President Tinubu’s Renewed Hope agenda, which aims to raise Nigeria’s oil production to two million barrels per day by 2027 and three million barrels per day by 2030.

Nigeria, Africa’s largest oil producer, has in recent years struggled with declining output due to a combination of underinvestment, oil theft, operational disruptions, and regulatory bottlenecks. The Federal Government believes that the ongoing reforms, anchored on the Petroleum Industry Act, will help restore investor confidence, attract fresh capital, and reverse the downward trend in production.

By making it clear that signature bonuses and bidding fees are non-refundable, and that licences must be actively developed or reclaimed, the government is signalling a decisive shift towards discipline, accountability, and value creation in the upstream oil and gas sector. The authorities insist that only serious investors with the capacity and commitment to develop Nigeria’s hydrocarbon resources should participate in the country’s licensing rounds, as the reforms continue to reshape the industry.