NUPRC weighs royalty relief for new oil assets, marginal fields

Nigeria’s upstream petroleum regulator is considering royalty relief measures for new oil developments and marginal fields as it seeks to attract international investment to its 2025 licensing round, signalling a potential shift in fiscal terms under the country’s reformed regulatory framework.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Tuesday emphasised the investment opportunities available in the licensing round, which offers 50 oil and gas blocks across various terrains, as the regulator attempts to capitalise on renewed global interest in African hydrocarbons.

Speaking at the opening of the Sub-Saharan Africa International Petroleum Exhibition and Conference in Lagos, Oritsemeyiwa Eyesan, NUPRC chief executive urged “capable investors” to participate in the licensing round, describing it as part of a “targeted approach to responsible resource development” under the regulatory framework established by the Petroleum Industry Act 2021.

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The potential royalty relief represents a significant sweetener for an industry that has grappled with Nigeria’s historically complex fiscal regime. While Eyesan did not provide specific details on the proposed relief measures, industry analysts suggest they could prove crucial in attracting investment to Nigeria’s upstream sector, which has seen declining output in recent years.

“We invite capable investors to participate and help realise Nigeria’s promising upstream potential,” Eyesan said, highlighting what she characterised as a more predictable and transparent regulatory environment following the PIA’s implementation.

The Nigerian regulator’s courtship of investors comes as Africa’s share of global energy investment has expanded markedly. Eyesan noted that of the $520bn projected in worldwide capital investment this year, Africa expects to attract between $48bn and $50bn, over 8 per cent of the total, more than double the sub-4 per cent share recorded in previous years.

She attributed the resurgence to renewed investor interest in both frontier and established basins, citing not only Nigeria but also Namibia and Mozambique as beneficiaries of the shifting capital flows.

However, Nigeria faces stiff competition for that capital. Namibia has emerged as a hot exploration destination following significant discoveries by TotalEnergies and Shell, whilst Mozambique continues developing its substantial liquefied natural gas resources. Meanwhile, Nigeria’s oil production has struggled to reach target levels due to theft, underinvestment and infrastructure challenges.

The NUPRC chief emphasised the importance of domestic and regional capital formation as a “stabilising force” for Africa’s energy future, noting that African independent operators are already playing an expanding role in Nigeria’s upstream sector.

“As we work to draw in more external investment, encouraging capital formation within Africa remains essential,” Eyesan said. “Domestic capital brings stronger commitment and stability, creating more opportunities for development.”

She highlighted the establishment of the Africa Energy Bank, headquartered in Nigeria, as a “milestone” in strengthening indigenous financing capabilities, though she acknowledged that “unified support from stakeholders will be crucial to its success”.

The bank, announced in recent years as a pan-African institution to finance energy projects across the continent, represents an attempt to reduce dependence on Western capital, which has increasingly shied away from fossil fuel investments under environmental, social and governance pressures.

Read also: NUPRC chief Eyesan targets production boost, revenue expansion in upstream sector

Eyesan also pointed to growing regional cooperation through expanded gas and power infrastructure and regulatory alignment via platforms such as the African Petroleum Regulators’ Forum, which she said are strengthening Africa’s collective voice globally.

The 2025 licensing round comes at a critical juncture for Nigeria’s petroleum sector. Whilst the PIA was intended to provide clearer fiscal terms and regulatory certainty, implementation challenges have persisted. The potential royalty relief could address concerns about Nigeria’s fiscal competitiveness compared with other African producers.

Industry observers will be watching closely for details on the proposed incentives, particularly regarding their duration, qualifying criteria and impact on government revenues—a sensitive issue given Nigeria’s fiscal constraints and dependence on oil income.