The Federal Government of Nigeria has reduced the signature bonus required for participation in the 2025 oil block licensing round, in a major move aimed at attracting more investors into the country’s upstream petroleum sector. The new signature bonus has been cut to a minimum of $3 million and a maximum of $7 million per block, compared to the $10 million charged per block during the 2024 oil block bid round.
This development was revealed in a document titled “Frequently Asked Questions (FAQs) on the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) 2025 Licensing Round”, which was released virtually. According to the document, the reduction represents a crash of between 70 per cent and 30 per cent in the entry cost, depending on the category of oil block.
The Nigerian Upstream Petroleum Regulatory Commission disclosed that the Minister of Petroleum Resources approved the new pricing structure as part of efforts to lower entry barriers and encourage wider participation by both local and foreign oil and gas companies. The commission stated that all bidders are now required to submit offers within the approved range of $3 million and $7 million.
The regulator also clarified that the designated account for the payment of the signature bonus remains United States dollar–denominated, meaning that the payments must be made in foreign currency and not in Nigerian naira. This is seen as part of efforts to maintain transparency and stability in the oil and gas licensing process.
The NUPRC explained that the 2025 licensing round will follow a score-based evaluation approach rather than a purely financial bid system. Under this approach, companies will be assessed based on their proposed signature bonus, work programme commitments, technical competence, professionalism, and human and technical capacity. The commission also said it will consider unit production cost per barrel in relation to the proposed work programme during assessment.
Other key parameters include the percentage of bank guarantees made available by bidders, balance sheet strength, company turnover, corporate governance structure, and environmental sustainability plans such as green energy strategy and decarbonisation programmes. These measures are part of Nigeria’s broader oil and gas reform agenda to improve transparency, efficiency, and environmental responsibility in the upstream petroleum sector.
On the financial requirements for participation, the NUPRC stated that companies seeking to bid for deep offshore oil blocks must meet a minimum financial threshold of an average of $100 million. For onshore and shallow water oil blocks, the required average financial capacity is set at $40 million.
According to the commission, bidders must demonstrate their financial strength through one of the following options: an average annual turnover of $100 million for deep offshore blocks and $40 million for onshore and shallow water blocks; minimum cash in bank of the same amounts; or a bank guarantee to the tune of $100 million for deep offshore and $40 million for onshore and shallow water blocks.
For newly incorporated companies that may not yet have strong financial records, the regulator said a parent company guarantee will be accepted. Such guarantees must be valued at $100 million for deep offshore blocks and $40 million for onshore and shallow water blocks.
The NUPRC also placed limits on the number of oil and gas assets that a single bidder can apply for during the 2025 licensing round. It stated that no bidder, whether acting alone or as part of a consortium, is allowed to submit applications for more than two assets in total. The commission added that participation in more than one consortium will still count towards this limit.
To prevent abuse of the process, the regulator warned that companies with direct or indirect equity ownership, management involvement, or control across multiple consortium vehicles will have all such applications aggregated and treated as a single bidder’s submission.
On technical capacity, the NUPRC said applicants will be evaluated based on their experience and expertise in key oil and gas operational areas. These include geological and geophysical capabilities, drilling and well engineering, reservoir evaluation and management, production engineering and technology, as well as development planning and facilities engineering and management.
Industry stakeholders have described the reduction in the signature bonus as a strategic step that could improve Nigeria’s competitiveness in the global energy market, especially at a time when several African oil-producing countries are also revising their petroleum fiscal terms to attract fresh investments.
The 2025 oil block licensing round is expected to play a critical role in boosting crude oil production, increasing foreign direct investment, creating jobs, and strengthening Nigeria’s position in the global oil and gas industry.
