The Nigerian National Petroleum Company Limited (NNPCL) has secured a total of N318.05 billion between January and August 2025 to fund frontier oil exploration across inland basins. This funding was drawn from the statutory 30 percent deductions of Production Sharing Contract (PSC) profits as mandated by the Petroleum Industry Act (PIA) 2021.
Documents from the Federation Account Allocation Committee (FAAC) September 2025 meeting reveal that these deductions were consistently applied despite fluctuations in PSC profits. In total, PSC profits amounted to N1.06 trillion in the first eight months of 2025, far below the budgeted N1.58 trillion.
The Frontier Exploration Fund, established under the PIA 2021, ensures that 30 percent of PSC profits are dedicated to exploration in underexplored basins, including Anambra, Bida, Sokoto, Dahomey, Chad, and Benue. Regulations also direct the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to manage the fund through an escrow account and produce an annual Frontier Basin Exploration and Development Plan.
In July 2025, the NUPRC unveiled its exploration roadmap, highlighting seismic surveys, stress-field detection, data integration, and new drilling activities. These included the logging and testing of the Eba-1 well in Dahomey, a new wildcat drilling in Bida, reappraisal of Wadi wells in Chad, and the reassignment of Ebeni-1 drilling in Benue.
Signed by NUPRC Chief Executive, Gbenga Komolafe, the document stressed that outcomes from these efforts would shape future exploration and de-risking of assets.
The monthly allocations varied significantly, ranging from N6.83 billion in June to N78.94 billion in August, highlighting volatility in PSC revenues. Notably, NNPCL received an equal sum of N318.05 billion as management fees within the same period, bringing its total inflow to N636.1 billion for exploration and management combined.
Stakeholders, however, have raised concerns. Mr. Ademola Adigun, Chief Executive Officer of AHA Strategies, criticized the allocation: “The money allocation is unrealistic, too high. It is not well used now. Maximum of 10 percent is what I would suggest.”
Meanwhile, Professor Dayo Ayoade, an energy law scholar at the University of Lagos, urged caution, warning against hasty amendments to the Petroleum Industry Act: “It took us 19 years of reform to agree on the PIA. The Frontier Exploration Fund, in many ways, was like a counterbalance to the Host Community Trust Fund.”
The Federal Government is already reviewing the deduction model, following President Bola Tinubu’s directive at the Federal Executive Council (FEC) meeting in August 2025. The President emphasized that deductions such as the 30 percent allocation to frontier exploration must be reassessed to boost public revenue.
okay.ng reports that oil workers’ unions, including the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), have rejected moves to amend the PIA and divest joint venture assets managed by NNPCL. They warned that such policies could destabilize the oil sector and endanger workers’ welfare.
