The Petroleum Industry Act (PIA) 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 (FEF)—a statutory pool meant to finance exploration in under-explored basins across the country. Today, billions of Naira have accrued to the Fund, thus demanding a prompt response from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). Deploying the funds as and when due complies with the provisions of the law.
What the law says
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 NNPC 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.
NNPCL has met its obligations
The NNPCL deserves commendation for having kept alive its own obligations. Recent figures show that NNPCL has consistently complied with its own statutory duties:
• In the first nine months of 2025 alone, NNPCL generated N801.3 billion for Management Fees and the FEF — representing 56.5 per cent of the annual projection.
• Both FEF and management fees received N400.667 billion each during the period.
• Industry checks indicate that about $600 million 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.
Ministerial concern confirms the delays
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.
What the delays mean for Nigeria
1. Slower frontier exploration
Seismic surveys, geological studies, and drilling campaigns require predictable funding. With funds locked in escrow, companies cannot begin or continue planned frontier projects.
2. Weakening investor confidence
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.
3. Delayed revenue and reserve growth
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.
4. Overdependence on mature basins
With new frontiers stalled, more pressure is placed on the Niger Delta and other mature areas, increasing environmental strain and community tensions.
5. Loss of technical momentum
Frontier exploration is a key avenue for skills transfer, basin knowledge, geoscience advancements, and local content growth. Funding gaps widen Nigeria’s technology deficit.
A violation of both the letter and spirit of the PIA
By not deploying the Frontier Exploration Fund as and 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): The 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.
Time to fix it
Nigeria cannot afford 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:
• Keep to its promise by ensuring the timely release of 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 bottom line
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 her oil and gas reserves and increase production.
Charles Uzoma Writes from Lagos.
