The Nigerian National Petroleum Company Limited (NNPCL) has received a total of N318.05bn between January and August 2025 to fund frontier oil exploration activities.

The funds were generated through monthly deductions representing 30 per cent of Production Sharing Contract (PSC) profits, which are automatically set aside for exploration in inland basins under the Petroleum Industry Act (PIA) 2021.

The PIA established the Frontier Exploration Fund, mandating that 30 per cent of profits from NNPCL’s PSCs be allocated to exploration in under-explored basins, including Anambra, Bida, Dahomey, Sokoto, Chad, and Benue. By law, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) manages the fund through an escrow account and prepares an annual Frontier Basin Exploration and Development Plan.

In July 2025, the NUPRC unveiled its latest plan, which detailed seismic surveys, stress-field detection, data integration, and wildcat drilling across the identified basins. The plan included logging and testing of the Eba-1 well in Dahomey, drilling a new wildcat in Bida, reappraising Wadi wells in Chad, and reassigning the Ebeni-1 drilling in Benue.

Signed by the Chief Executive of the NUPRC, Gbenga Komolafe, the document noted that the outcome of these activities would guide further de-risking of assets and exploratory drilling in line with statutory requirements.

Analysis of Federation Account Allocation Committee (FAAC) records showed that PSC profits between January and August 2025 totaled N1.06tn, falling short of the projected N1.58tn by N518.76bn. Despite this shortfall, the statutory 30 per cent deduction for exploration was consistently applied, accumulating N318.05bn within the period.

The monthly breakdown highlighted sharp fluctuations.

January: N31.77bn (from N105.91bn profit)

February: N38.30bn (N127.67bn profit)

March: N61.49bn (N204.96bn profit)

April: N36.58bn (N121.93bn profit)

May: N38.8bn (N129.33bn profit)

June: N6.83bn (N22.77bn profit, the lowest so far)

July: N25.34bn (N84.48bn profit)

August: N78.94bn (N263.13bn profit, the highest so far)

By August, the deductions had accumulated N318.05bn for exploration funding. The same 30 per cent rule also applied to NNPCL’s management fees, mirroring the frontier deductions, and bringing the company’s management fees to N318.05bn. In total, NNPCL received N636.1bn for frontier exploration and management fees within the eight-month period.

The Federation Account, entitled to 40 per cent of PSC profits, also reflected the volatility of inflows.

January: N42.364bn

February: N51.067bn

March: N81.985bn

April: N48.772bn

May: N51.730bn

June: N9.110bn (lowest inflow)

July: N33.792bn

August: N105.250bn (highest inflow)

So far, the Federation Account has received N424.071bn from PSC profits in 2025, still below the budgeted N631.573bn, leaving a shortfall of N207.502bn.

Meanwhile, NNPCL has not remitted any funds from its interim dividend line, which was budgeted at N271.184bn monthly (N2.169tn year-to-date), creating further gaps in the federation’s revenue plan.

To address concerns, a FAAC subcommittee was formed to review the 30 per cent frontier deductions. The committee engaged with NNPCL, NUPRC, and the Central Bank of Nigeria, during which NNPCL presented details of exploration work conducted in inland basins since 1999 and outlined its ongoing and planned activities for 2025.