The Nigerian National Petroleum Company Limited has received N318.05bn between January and August 2025 for frontier oil exploration. This is according to documents from the September 2025 Federation Account Allocation Committee meeting.
The deductions represent 30 per cent of Production Sharing Contract profits, which are automatically set aside monthly for exploration in inland basins.
The Petroleum Industry Act 2021 created the Frontier Exploration Fund, which mandates that 30 per cent of profits from NNPC’s Production Sharing Contracts be channelled into oil search across under-explored basins, including Anambra, Bida, Dahomey, Sokoto, Chad and Benue.
The Nigerian Upstream Petroleum Regulatory Commission are also expected to manage the fund via an escrow account and issue a yearly Frontier Basin Exploration and Development Plan.
Further research has shown that the NUPRC in July 2025 unveiled a Frontier Basin Exploration and Development Plan detailing proposed seismic surveys, stress-field detection, data integration, and wildcat drilling across basins in Benin Dahomey, Anambra, Bida, Sokoto, Chad, and Benue.
Signed by the Chief Executive of the NUPRC, Gbenga Komolafe, the document proves that the result of these activities would determine further de-risking of assets and exploratory drilling in line with statutory requirements.
Further analysis of the FAAC documents by The PUNCH revealed that PSC profits so far this year amounted to N1.06tn, below the budgeted N1.58tn, creating a shortfall of N518.76bn.
Despite this gap, the statutory 30 per cent deduction for frontier exploration was consistently applied, month after month, producing an accumulated N318.05bn by August.
Speaking recently, the Chief Executive Officer of AHA Strategies, an oil and gas expert, Mr Ademola Adigun, highlighted the 30 per cent allocation of Production Sharing Contract profits to frontier oil exploration, describing it as “too high.”
Reacting to the report that NNPCL got N318.05bn for frontier exploration in just eight months without paying dividends to the Federation Account, Ademola stressed the present arrangement is not justifiable under prevailing economic conditions.
“The money allocation is unrealistic, too high. It is not well used now.
I don’t think it’s worth it to continue this way,” he said.
An energy law scholar at the University of Lagos, Professor Dayo Ayoade, concluded by warning against a hasty amendment of the Petroleum Industry Act, emphasising that the law took nearly 20 years of negotiations and compromises before it was passed.
“It took us 19 years of reform to agree on the PIA, and the PIA is actually a delicate balance of a lot of compromises. The Frontier Exploration Fund, in many ways, was like a counterbalance to the Host Community Trust Fund.
It was one of the biggest problems I had with the PIA because I knew that 30 per cent of PSC profits going into just exploration was too high. I would rather that exploration be liberalised and put in the hands of the private sector.
There should not be any NNPCL spending government money on this project.
The funding structure is not really sustainable, and that is the truth. NNPCL is not really a commercial company. All it does is act as a middleman for government and collect money it has not really earned,” he added.
Folami David is a dynamic journalist who views the world through an analytical lens, translating complex narratives across multiple industries into compelling stories. With an insatiable appetite for information and a keen eye for emerging trends, Folami specializes in uncovering the interconnections between technology, business, culture, and society.
