How to Secure an Oil Block in Nigeria: NUPRC Bidding Rules, Costs and Deadlines

Getting an oil block in Nigeria now means entering a formal upstream licensing round run by the Nigerian Upstream Petroleum Regulatory Commission under the Petroleum Industry Act of 2021. The era of blocks handed out quietly by political figures is legally finished.

International energy firms, domestic consortia, and indigenous independents all go through the same competitive bidding process, and licences are awarded on technical competence, verified financial capacity, and regulatory compliance.

A successful bidder receives a Petroleum Prospecting Licence to explore for hydrocarbons. If the exploration produces a commercial discovery, that licence is converted into a Petroleum Mining Lease for long term production.

The federal government has also cut baseline signature bonuses well below historical levels, part of a push to raise daily crude output and national reserves by making entry cheaper for both foreign and local investors.

The handover from the Department of Petroleum Resources to the NUPRC changed the shape of the industry. Open competition replaced patronage, and the intent is that acreage goes to operators who can put it into production rather than sit on it.

The five stages of an NUPRC licensing round

The process runs in fixed order through the NUPRC Licensing Round Portal at br2025.nuprc.gov.ng.

It opens with the announcement and the portal launch. The commission publishes the blocks on offer across the main sedimentary basins, covering onshore, shallow water, deep offshore, and frontier acreage, along with the guidelines and evaluation criteria.

Interested firms then submit expressions of interest, pay the non-refundable application fees, and upload corporate documentation proving beneficial ownership, technical expertise, and financial solvency.

Companies that prequalify get access to the national data repository, where they can lease or buy seismic data, work the geology of a block, and put together detailed technical and commercial development work programmes.

The bidding itself is a live event. Regulators, industry observers, and journalists are in the room while commercial offers are opened and evaluated, and the provisional awards come out of that session.

The last stage is conditional. Provisional winners have a fixed window to meet their financial obligations before final executive sign off and lease execution.

Opening the data rooms before the bid is what makes the numbers meaningful. Technical teams can value an asset off real subsurface data instead of guessing, which is how you get bidders committing to work programmes they can actually deliver.

Who is allowed to bid

The prequalification thresholds are there to keep out firms with no capacity to take a block to first oil.

A bidding entity or consortium has to be incorporated with the Corporate Affairs Commission in Nigeria before a PPL can be awarded. Foreign companies may take part in the early stages, but the licence can only be held by a Nigerian subsidiary.

Applicants also need a verified track record in safe exploration, upstream development, and environmental safety compliance.

The financial gates are set per application. An entity can bid on a maximum of two blocks, each application carries a non-refundable processing fee of $25,000, and every commercial offer must be backed by a bank issued bond or guarantee worth 5% of that block’s signature bonus.

Prequalification also examines environmental, social, and governance history. Under the PIA, bidders must present a Host Communities Development Trust plan and show compliance with local content law supervised by the NCDMB.

Beyond that, a bidder has to show real access to capital, since drilling, seismic acquisition, and production infrastructure all have to be paid for long before any barrel is sold.

The signature bonus and the 90 day clock

Winning the bid gets you a provisional award and nothing more. The real test is paying the signature bonus, the single lump sum paid to the federal government when the upstream agreement is signed.

Recent NUPRC rounds have capped signature bonuses between $3 million and $7 million per block depending on how difficult the terrain is, far below what the same acreage would once have cost.

The compliance window after the award is 90 days, and the commission does not extend it. A winner who has not fully settled the signature bonus and the other post-award obligations by then loses the allocation automatically.

Forfeited blocks go straight back into the government’s licensing basket or to verified reserve bidders.

The deadline exists to stop asset flipping, where a thinly capitalised firm wins a licence purely to resell it at a premium. Ninety days of required liquidity filters those bidders out, and it shortens the gap between award and exploration.

What the licensee has to do after the award

Paying the bonus does not buy the right to sit on the acreage. The NUPRC tracks delivery of the technical work programme submitted during bidding, closely.

Operators have to hit specific exploration milestones in the first phase of the PPL, such as acquiring fresh 3D seismic data or drilling an agreed number of wildcat wells.

Missing those milestones brings heavy fines or outright revocation of the licence. The PIA runs a use it or lose it doctrine on oil acreage precisely so that prospective reserves are not locked away for years without investment.

Regularisation also means setting up the mandatory decommissioning and abandonment funds, so the money for environmental remediation exists before production ends rather than after.

Upstream cost parameters at a glance