Nigeria Slashes Oil Block Fees to Boost Investment in Upstream Sector

The federal government has reduced the signature bonus required to enter oil blocks, lowering the fee to between US$3 million and US$7 million for the 2025 licensing round.

The new terms are intended to reduce barriers to entry and encourage more investment in Nigeria’s oil sector. This marks a further reduction from 2024, when the signature bonus was cut from about US$200 million to US$10 million. Previously, deep‑water fields required a US$10 million bonus, while onshore or shallow‑water fields carried a US$7 million fee; the new structure brings those down to as little as US$3 million for applicable blocks.

Firms awarded a block will receive a Petroleum Prospecting Licence, giving them the exclusive right to drill exploration and appraisal wells and carry out petroleum exploration operations. The licence runs initially for three years (with possible extensions for onshore and shallow‑water blocks), and for five years for deep‑water and frontier blocks.

The commission also highlighted a two‑stage bidding process: first a qualification phase, then a bid phase during which shortlisted applicants must submit technical and commercial proposals. No bidder — whether solo or part of a consortium — may apply for more than two assets in total.

The latest cut in fees is seen as a strategic effort by the government to make Nigeria’s upstream oil sector more attractive and accessible to a broader range of investors.