In the bidding procedure for recently auctioned oil blocks, the Federal Government has waived the signing bonus requirement.

This exemption, according to Mr. Heineken Lokpobiri, Minister of State for Petroleum Resources and Oil, is intended to draw in new investment and increase oil production.

At the ongoing Houston, Texas, 2024 Offshore Technology Conference (OTC), he made this revelation.

An oil company’s upfront payment to the government, payable in one non-recoverable lump sum for the right to develop an oil block commercially following successful bidder selection in the license round, is called a signing bonus.

The Nigerian Upstream Petroleum Regulatory Commission had earlier published the bidding procedures for the 2024 oil bid round, which included five deep offshore assets and 12 oil blocks.

The minister gave investors assurances during the event that oil will continue to play a significant role in Nigeria’s economy and that the government is working to foster an atmosphere that will draw the most foreign investment to the nation.

Lokpobiri, who encouraged investors to seize the chance to make investments during the oil bid round, stated, “Historically, no source of energy goes away. So, do not be deceived that fossil fuel will go away. Discourse at the recent global conferences has further proved that fossil fuel will continue to remain, the quicker we extract our oil, the better for us as a country

“We are here at OTC to show the rest of the world that Nigeria is different and our government is different, in creating the best regulatory framework, allowing competitiveness, and removing all the investment barriers.

“Today, we are restoring investment confidence in the sector and ensuring investors can bring in their funds without worries. This will show to the world that Nigeria is ready for business.”

In announcing the elimination of the signing bonus, Lokpobiri stated that over time, the payment of signature bonuses has continued to be a major obstacle for both investors and new investment in the industry.

“Stakeholders had explained that globally, payable signature bonuses by awardees of an oil bloc or marginal field rank highest in Nigeria. On many occasions, the huge amount involved in payment of signature bonus was a setback for investors,’’ the minister added.

According to him, these rewards would now be linked to prompt exploration and production efforts by new entrants in order to guarantee investors a smooth landing.

“Rather than pay such monies into the coffers of the Federal Government, the investor must now be able to prove to us that they have the funds required to move into exploration.

“What we have resolved going forward and with the 2024 oil bid round is to see that fields won in a bid round must be put into immediate use as against what obtained in past where fields are left idle after assets are won.” Lokpobiri added.

According to him, the new approach will increase activity in the upstream oil sector and generate jobs.

The recent Presidential Executive Orders, which were released in March of this year, according to Gbenga Komolafe, Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), were intended to increase the effectiveness and appeal of Nigeria’s oil and gas industry.

He continued by saying that it would result in an increase in the country’s oil and gas reserves, which are now at 209.26 trillion cubic feet of natural gas and 37.5 billion barrels of crude oil and condensate.

Komolafe said, “The exercise, which was initially announced on the 29th of April 2024, is a significant leap in our strategic hydrocarbons development initiative.

“This round introduces twelve meticulously selected blocks across diverse geological spectra — from the fertile onshore basins to the promising continental shelves and the untapped depths of our deep offshore territories.

‘’Each block has been chosen for its potential to bolster our national reserves and stimulate economic vitality.

“Our approach is underpinned by the robust legal framework of the Petroleum Industry Act 2021, which ensures compliance with best practices to boost investors’ confidence.

‘’In keeping with the provisions of the PIA and regulations made under the Act, the commission has issued a licensing round guideline and published a licensing round plan for the twelve blocks (namely PPL 300-CS; PPL 301-CS; PPL 3008; PPL 3009; PPL 2001; PPL 2002; PML 51; PPL 267; PPL 268; PPL 269; PPL 270; and PPL 271).

“In addition to these blocks, the seven deep offshore blocks from the 2022 Mini-Bid Round Exercise which cover an area of approximately 6,700 km2 in water depths of 1,150m to 3,100m shall also be concluded along with this licensing round.’’