Foreign oil firms get 90 days to register Nigerian units after winning blocks

FOREIGN oil and gas companies taking part in Nigeria’s 2025 licensing round can bid for assets without first setting up local subsidiaries, but any foreign firm that emerges successful must incorporate a Nigerian entity within 90 days of receiving its offer letter.

This position, clarified by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), reflects the country’s effort to draw foreign capital into 50 exploration blocks across both mature and frontier basins, while still preserving requirements for local participation once awards are made.

According to information released after pre-bid conferences in January, the regulator confirmed that foreign bidders may compete directly, but must register a Nigerian subsidiary within 3 months of receiving an offer. This step is a mandatory condition before a licence can be formally granted.

Industry analysts say the policy strikes a balance between flexibility and accountability. Companies can avoid the costs of immediate incorporation during bidding, yet must commit to a local presence if they secure assets.

The tender includes 35 blocks in the Niger Delta – covering 16 onshore fields, 18 shallow-water assets and one deepwater prospect. A further 15 blocks lie in frontier basins such as Benin, Anambra, Benue and Chad, which are considered higher risk because of limited geological data.

Lower entry hurdles

To encourage broader participation, the commission has eased several financial conditions. The security required for work programme commitments has been cut sharply from a former minimum of 100 percent to ‘not less than 1 percent,’ although the regulator stressed that all obligations remain enforceable after awards.

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Signature bonuses have been set between $3 million and $7 million per asset, payable within 60 days of receiving an offer. While higher bonuses may improve bid scores, the regulator noted that final decisions will depend on the overall strength of each bid.

Prospective bidders are also required to pay a $10,000 expression-of-interest fee and a $25,000 application fee for each asset. Each company may bid for up to two blocks, with any submission beyond this limit automatically disqualified.

“This upstream sector is serious business. It is for long-term investment, and it is an open invitation to partnership, transparency and shared responsibility as we work together to shape the next phase of Nigeria’s oil and gas industry,” NUPRC Chief Executive, Ms Oritsemeyiwa Eyesan, said in late January.

Consortium options

The licensing framework allows bidders to form consortia, provided they submit valid agreements, appoint authorised representatives and name an operator holding at least 30 percent participating interest.

In addition, consortia can be created after pre-qualification but before the commercial bid stage, as long as all members are pre-qualified and the commission grants approval.

To guard against operational risk, the commission stated that if a consortium member defaults and disrupts operations, that party’s interest will be withdrawn and reallocated among the remaining partners.

Focused incentives

Fiscal incentives under the 2025 round are not across-the-board concessions. They are targeted at greenfield projects, particularly non-associated gas developments, and deepwater fields that require large capital outlays and long development timelines.

Winning bidders must select either a concessionary structure, where the federal government retains a back-in right of up to 60 percent, or a production sharing contract under which NNPC Limited acts as concessionaire and the investor serves as contractor.

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Data quality varies widely across the blocks. While mature basins have extensive seismic and well data, frontier areas face greater uncertainty due to limited coverage. Companies are only permitted to obtain data from approved sources, including the National Data Repository and licensed firms such as TGS ASA and TGS-PetroData.

The combination of a flexible incorporation window, reduced financial barriers and clearer data disclosure underscores Nigeria’s attempt to make its upstream sector more competitive globally, while ensuring that successful bidders ultimately establish a local footprint.