Market News

By : Kingsley Jeremiah, Abuja

The Nigerian National Petroleum Company Limited (NNPCL) has deducted a total of N235.6 billion between January and July 2025 from the Frontier Exploration Fund (FEF), in line with the provisions of the Petroleum Industry Act (PIA), according to the company’s financial documents.

The deductions represent 30 per cent of Profit Sharing Contract (PSC) proceeds earmarked for exploration in frontier basins across the country, predominantly in the North, including the Chad Basin, Benue Trough, Anambra Basin, and other untapped hydrocarbon-rich areas.

The fund, designed to diversify the nation’s oil production away from the Niger Delta, despite climate commitments, has remained contentious over priorities, transparency and long-term strategy.

In May, NNPCL announced that oil drilling would resume in the northern region by June. Its Group Chief Executive Officer, Bayo Ojulari, said operations were scheduled to restart at the Kolmani field, which cut across Bauchi and Gombe states.

Ojulari, who was appointed in April and described by the Presidency as the right choice to overhaul the state oil company, had told the BBC Hausa Service that exploration in the North remained a top priority under the PIA framework.

“The government is on track with prospects for oil in the North,” he had stated. While results remained elusive, including the one billion barrel oil reserves declared to have been discovered in the basin, over $3 billion has reportedly been spent on oil search in the northern region over the past two decades, as successive governments pursue frontier exploration despite criticism from civil society and environmental groups.

With the PIA now in effect, a dedicated statutory fund, estimated at about $400 million yearly is legally designed to finance such activities. Figures show that in January, NNPC deducted $8.16 million and N9.73 billion, translating to a total naira equivalent of N22.2 billion.

In February, the deduction rose to $17.59 million and N5.8 billion, bringing the monthly equivalent to N31.7 billion. March saw further increases, with $18.66 million and N10.47 billion deducted, totalling N38.3 billion.

In April, deductions peaked at $28.51 million and N17.71 billion, resulting in the highest single-month equivalent of N61.4 billion within the period.

May reflected a sharp adjustment, as the company recorded $1.88 million and N33.58 billion in deductions. The equivalent stood at N36.5 billion, showing that domestic currency accounted for the bulk of that month’s transfers.

In June, deductions stood at $24.17 million and N499.1 million, totalling N38.7 billion. By July, deductions fell dramatically to $3.99 million and N732.9 million, with a combined equivalent of N6.8 billion.

The cumulative figure of N235.6 billion in just seven months highlights the speed and intensity of allocations to frontier exploration compared with other statutory funds under the PIA.

In comparison with host-community allocations for oil-producing communities in the Niger Delta, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) had said in June that the region received N98 billion and about $150 million as their three per cent share of the Host Communities Development Fund (HCDF), a total naira equivalent of N328.2 billion in the last four years.

By contrast, with FEF receiving N235.6 billion in only seven months, the host-community fund is just N92.6 billion larger despite spanning four years, while on a monthly average, FEF allocations of N33.7 billion outpaced host-community receipts of N6.8 billion by nearly five times, which is about 392 per cent increase.

Four years ago, when the PIA was passed, analysts, especially from the Nigerian Delta region, had said the funding imbalance suggests a strong policy tilt towards opening new oil frontiers rather than addressing the development needs of host communities where oil production has historically caused environmental degradation and social disruption.