NNPCL Rakes in N318bn for Frontier Oil Search in 8 Months

The Nigerian National Petroleum Company Limited (NNPCL) has received a whopping N318.05bn between January and August 2025 to fund frontier oil exploration, findings from Federation Account Allocation Committee (FAAC) documents have revealed.

The deductions, obtained from the September 2025 FAAC meeting, represent 30 per cent of Production Sharing Contract (PSC) profits, which are automatically set aside each month for exploration in inland basins under the Petroleum Industry Act (PIA) 2021.

The fund—known as the Frontier Exploration Fund—is managed by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and targeted at under-explored areas such as Anambra, Bida, Dahomey, Sokoto, Chad, and Benue basins.

NUPRC’s 2025 Frontier Plan

In July, the NUPRC unveiled a Frontier Basin Exploration and Development Plan, detailing seismic surveys, data integration, stress-field detection, and wildcat drilling across key basins. The plan, signed by Chief Executive Gbenga Komolafe, listed projects including:

• Logging and testing of the Eba-1 well in the Dahomey basin,
• Drilling a new wildcat in Bida,
• Reappraisal of Wadi wells in Chad, and
• Reassignment of the Ebeni-1 drilling in Benue.

Volatile Monthly Inflows

An analysis of FAAC figures shows how volatile the frontier deductions have been:

• January: N31.77bn from N105.91bn profit
• February: N38.30bn from N127.67bn profit
• March: N61.49bn from N204.96bn profit
• April: N36.58bn from N121.93bn profit
• May: N38.8bn from N129.33bn profit
• June: N6.83bn from N22.77bn profit (lowest)
• July: N25.34bn from N84.48bn profit
• August: N78.94bn from N263.13bn profit (highest)

By August, NNPCL had not only secured N318.05bn for frontier exploration, but also an equal N318.05bn as management fees—bringing its total take to N636.1bn in just eight months.

Federation Account Feels the Pinch

While NNPCL made huge deductions, the Federation Account, entitled to 40 per cent of PSC profits, received just N424.07bn year-to-date—well below the budgeted N631.57bn, leaving a shortfall of over N207bn.

Compounding the problem, NNPCL has so far failed to remit its budgeted interim dividend of N2.16tn, worsening the federation’s cash crunch.

Calls for Transparency and Reform

The revelations have prompted scrutiny. FAAC set up a special subcommittee to investigate the 30 per cent deductions. Members demanded NNPCL submit detailed financial records of exploration projects before and after the PIA came into effect.

The Budget Office DG, Tanimu Yakubu, warned that Nigeria had already lost 60 per cent of its gross oil revenue to PIA-mandated deductions, stressing the urgent need for reform.

President Bola Tinubu has ordered a review of deductions and revenue retention practices by key agencies, including NNPCL, directing his Economic Management Team to recommend adjustments.

Experts Divided

Energy expert Ademola Adigun described the 30 per cent allocation as “unrealistic and too high,” recommending a drastic cut to 10 per cent maximum.

But energy law scholar, Prof. Dayo Ayoade of UNILAG, cautioned against rushing to amend the PIA, warning it took nearly two decades of compromise to pass. He, however, argued that NNPCL should not be spending public money on frontier exploration, urging government to instead liberalise the process and incentivise private investors.

Labour Unions Push Back

Meanwhile, oil unions—PENGASSAN and NUPENG—have rejected alleged moves to alter the PIA or strip NNPCL of oil and gas control, warning it could destabilise the economy and endanger workers’ welfare.