The Nigerian National Petroleum Company Limited (NNPCL) has amassed N318.05 billion from January to August 2025 to finance frontier oil exploration, according to newly uncovered documents from the Federation Account Allocation Committee (FAAC) meeting held in September 2025.
These funds, derived from a mandatory 30% allocation of profits from Production Sharing Contracts (PSCs), are designated for oil exploration in Nigeria’s inland basins, such as Anambra, Bida, Chad, Sokoto, Benue, and Dahomey. The Frontier Exploration Fund, established under the Petroleum Industry Act (PIA) of 2021, requires that these profits be channeled into exploring under-tapped oil basins to expand Nigeria’s petroleum resources.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) oversees the fund through an escrow account and released its 2025 Frontier Basin Exploration and Development Plan in July. The plan details activities such as seismic surveys, wildcat drilling, and stress-field detection across the targeted basins. Specific initiatives include drilling the Eba-1 well in the Dahomey basin, reappraising wells in the Chad basin, and launching new drilling efforts in the Bida and Benue basins.
According to FAAC records, PSC profits for the year reached N1.06 trillion, falling short of the projected N1.58 trillion, resulting in a N518.76 billion deficit. Despite this shortfall, the 30% deduction for frontier exploration was consistently applied, accumulating N318.05 billion by August. Monthly allocations fluctuated significantly, ranging from a low of N6.83 billion in June, when profits dipped to N22.77 billion, to a high of N78.94 billion in August, driven by a profit surge to N263.13 billion.
NNPCL also received an identical N318.05 billion as management fees, mirroring the exploration fund deductions. This brought the company’s total allocation for exploration and management to N636.1 billion for the first eight months of 2025.
The Federation Account, entitled to 40% of PSC profits, faced similar volatility, receiving N424.071 billion year-to-date, well below the budgeted N631.573 billion. The shortfall, combined with NNPCL’s failure to remit any interim dividends (budgeted at N2.169 trillion for the period), has strained federal revenues, prompting increased scrutiny.
A FAAC subcommittee was formed to review the 30% frontier deductions and met with NNPCL, NUPRC, and the Central Bank of Nigeria. NNPCL presented its exploration activities since 1999 and its plans for 2025, but committee members demanded more detailed financial records for pre- and post-PIA projects. NNPCL was instructed to provide this information by September 19, 2025, though the task remains ongoing.
The Director-General of the Budget Office, Tanimu Yakubu, highlighted that deductions under the PIA, including the 30% for frontier exploration and management fees, have reduced Nigeria’s oil revenue by nearly 60%. Speaking at a stakeholders’ meeting in Abuja, Yakubu noted that low oil prices and production shortfalls in 2025 have exacerbated the revenue decline. He has initiated discussions with the National Assembly to amend the PIA to address these losses.
In a related development, President Bola Tinubu directed a review of revenue retention practices by key agencies, including NNPCL, during a Federal Executive Council meeting in August 2025. The review aims to improve fiscal efficiency and unlock resources for economic growth.
