Why NUPRC needs to release Frontier Exploration Fund

The Petroleum Industry Act was enacted to fix long-standing structural gaps in Nigeria’s oil and gas sector. Among its strongest innovations is the creation of the Frontier Exploration Fund — a statutory pool meant to finance exploration in under-explored basins across the country. Today, billions of Naira have accrued to the Fund, yet the Nigerian Upstream Petroleum Regulatory Commission seems not in a hurry to deploy these resources as mandated by law. The consequences may be too costly to ignore.

The PIA sets out a straightforward framework for funding and exploring Nigeria’s frontier basins:

Section 9(4) establishes the Frontier Exploration Fund and mandates that 30 per cent of the Nigerian National Petroleum Company Limited’s profit oil and profit gas under PSCs and similar arrangements be channelled into the Fund.

Section 9(5) requires that these remittances be transferred into a dedicated escrow account and used strictly for frontier exploration and development, subject to appropriation by the National Assembly.

Section 9(1) gives NUPRC the duty to promote frontier-basin exploration, undertake basin studies, and evaluate frontier acreages.

Section 64(c) further ensures that PSC profit oil and gas cannot reach the Federation without first deducting the statutory 30 per cent for the FEF and management fees.

These provisions make the flow and use of FEF money non-discretionary. In simple terms, the money must enter the escrow account, and it must be used for exploration.

Recent figures show that NNPCL has consistently complied with its own statutory duties:

In the first nine months of 2025 alone, NNPCL generated N801.3bn for Management Fees and the FEF — representing 56.5 per cent of the annual projection.

Both FEF and Management Fees received N400.667bn each during the period.

Industry checks indicate that about $600m has already been accumulated in the FEF escrow account.

The national oil company has kept its side of the bargain. What remains missing is the timely mobilisation and deployment of these funds by NUPRC.

In a recent intervention, the Minister of Petroleum Resources (Oil), Heineken Lokpobiri, publicly directed NUPRC and NNPCL to immediately deploy the accrued FEF to support seismic and appraisal work in frontier basins. He lamented that, since assuming office, the Fund has not been meaningfully used for its intended purpose.

His remarks validate what industry observers have been saying for months: essential exploration activities are being stalled by bureaucratic inertia.

Seismic surveys, geological studies, and drilling campaigns require predictable funding. With funds locked in escrow, companies cannot begin or continue planned frontier projects.

Regulatory unpredictability is one of the biggest risks investors fear. Delayed disbursement of a statutory fund signals governance instability, making Nigeria a tougher sell in upcoming bidding rounds.

Every year of delay in exploration pushes discoveries, production, and government revenue further into the future. Nigeria’s reserve replacement ratio, already low, continues to suffer.

With new frontiers stalled, more pressure is placed on the Niger Delta and other mature areas image.png increasing environmental strain and community tensions.

Frontier exploration is a key avenue for skills transfer, basin knowledge, geoscience advancements, and local content growth. Funding gaps widen Nigeria’s technology deficit.

By not deploying the Frontier Exploration Fund as at when due, the provisions of the PIA are effectively undermined.  Key PIA provisions state:

Section 9(5): funds must be used for frontier exploration.

Section 9(1): Commission must actively promote frontier development.

Section 64(c): PSC proceeds must flow according to statutory deductions.

The PIA intended the Fund to be automatic, ring-fenced, transparent, and insulated from administrative delays. Every month of inaction contradicts that intention.

Nigeria cannot afford further delays. The nation urgently needs diversification of exploration activity, discoveries, fresh reserves, and higher future production. Releasing and deploying the FEF is central to these objectives.

NUPRC should therefore:

Release funds to ongoing and upcoming frontier projects.

Prioritise seismic acquisition and basin evaluation.

Restore investor confidence through transparency and compliance.

Support the Minister’s directive for immediate mobilisation.

The Frontier Exploration Fund was created to ensure that frontier basins are never starved of capital. The funds are available. The law is clear. The opportunities are waiting. Nigeria has an urgent need to expand its oil and gas reserves and increase production.

Uzoma writes from Lagos