THE Nigerian National Petroleum Company Limited (NNPCL) has secured ₦318.05bn between January and August 2025 to finance oil exploration in Nigeria’s frontier basins, according to documents from the September Federation Account Allocation Committee (FAAC) meeting.
The funds, deducted monthly from Production Sharing Contract (PSC) profits, represent 30 per cent of the company’s earnings reserved under the Petroleum Industry Act (PIA) 2021.
The Act created the Frontier Exploration Fund to drive exploration across under-explored regions, including Anambra, Bida, Dahomey, Sokoto, Chad and Benue basins.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which manages the fund, released its 2025 Frontier Basin Exploration and Development Plan in July.
The plan outlined activities such as seismic surveys, well logging, stress-field detection, data integration and wildcat drilling.
Specific projects include testing the Eba-1 well in Dahomey, new drilling in Bida, and reassessment of Wadi wells in Chad.
Despite volatile earnings, the 30 per cent deductions were consistently applied, with monthly allocations ranging from as low as ₦6.83bn in June to as high as ₦78.94bn in August.
In total, NNPCL received ₦636.1bn for exploration and management fees within the eight-month period.
Meanwhile, the FAAC documents revealed that PSC profits this year, at ₦1.06tn, fell short of the ₦1.58tn target, creating a revenue gap for the Federation Account, which has so far received ₦424.07bn—₦207.5bn below projections.
The shortfall has sparked scrutiny.
FAAC set up a subcommittee to review the deductions, while President Bola Tinubu has ordered a reassessment of NNPCL’s 30 per cent frontier and management fee deductions to boost public revenue.
Experts remain divided. Oil and gas analyst Ademola Adigun described the allocation as “unrealistic and too high,” urging a reduction to 10 per cent.
In contrast, energy law scholar Professor Dayo Ayoade warned against hasty amendments to the PIA, arguing that the law took nearly two decades of negotiations to pass.
He stressed that while NNPCL must account for the funds, private investors should be incentivised to take on the risks of exploration rather than government financing through public funds.
With oil revenues already underperforming due to low prices and output shortfalls, stakeholders say the debate over NNPCL’s deductions will be critical to Nigeria’s fiscal stability in the months ahead.