The Nigerian National Petroleum Company Limited (NNPCL) has secured N318.05 billion between January and August 2025 for frontier oil exploration, according to documents obtained from the September 2025 Federation Account Allocation Committee (FAAC) meeting. The funds, representing 30% of Production Sharing Contract (PSC) profits, are automatically set aside each month for exploration in under-explored inland basins, including Anambra, Bida, Dahomey, Sokoto, Chad, and Benue. This allocation is mandated under the Petroleum Industry Act (PIA) 2021, which established the Frontier Exploration Fund.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is tasked with managing the fund through an escrow account and issuing an annual Frontier Basin Exploration and Development Plan. The 2025 plan outlines extensive exploration activities, including seismic surveys, stress-field detection, data integration, and wildcat drilling in multiple basins. Key projects include logging and testing the Eba-1 well in the Dahomey basin, drilling a new wildcat in Bida, and reassessing Wadi wells in Chad, with outcomes expected to inform further exploratory drilling.
Despite NNPCL accumulating N318.05 billion for frontier exploration, total PSC profits this year fell short of projections. The FAAC documents show that while PSC profits reached N1.06 trillion, they were below the budgeted N1.58 trillion, creating a shortfall of N518.76 billion. Monthly allocations to the frontier fund fluctuated sharply—from as low as N6.83 billion in June to N78.94 billion in August—reflecting the volatility of oil revenue, yet the statutory 30% deduction was consistently applied.
The deductions have drawn scrutiny from both government officials and industry experts. President Bola Tinubu recently directed a review of NNPCL’s 30% management fee and frontier exploration deductions to boost public savings and optimize revenue retention. Analysts, such as Mr. Ademola Adigun of AHA Strategies, argue that the current allocation is “unrealistic and too high,” while scholars like Professor Dayo Ayoade of the University of Lagos warn against a hasty amendment to the PIA, highlighting the law’s delicate balance achieved after nearly two decades of negotiations.
The debate comes amid broader concerns over Nigeria’s oil revenue performance. The FAAC documents indicate that the Federation Account has received N424.07 billion from PSC profits year-to-date, below the budgeted N631.57 billion, leaving a shortfall of N207.5 billion. Experts and lawmakers are now pushing for a more sustainable funding model that could include private sector involvement in frontier exploration, arguing that this would preserve fiscal federalism, reduce reliance on volatile PSC deductions, and ensure more transparent, efficient use of public funds.
source: punch