In a bid to stimulate fresh investments and enhance oil production, the Federal Government disclosed yesterday the abolition of the requirement to pay a signature bonus during bids for oil blocks.
The announcement was made by the Minister of State for Petroleum Resources, Mr. Heineken Lokpobiri, during his participation in the 2024 Offshore Technology Conference (OTC) held in Houston, Texas.
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Addressing the audience, Mr. Lokpobiri emphasized the enduring significance of fossil fuels, stating, “Historically, no source of energy goes away. So, do not be deceived that fossil fuel will go away.
Discourse at the recent global conferences has further proved that fossil fuel will continue to remain, the quicker we extract our oil, the better for us as a country.”
He underscored the Nigerian government’s commitment to fostering a conducive investment climate by instituting favorable regulatory frameworks and eliminating barriers to investment. “Today, we are restoring investment confidence in the sector and ensuring investors can bring in their funds without worries. This will show to the world that Nigeria is ready for business,” he asserted.
Highlighting the burdensome nature of signature bonuses, Mr. Lokpobiri explained, “Stakeholders had explained that globally, payable signature bonuses by awardees of an oil bloc or marginal field rank highest in Nigeria. On many occasions, the huge amount involved in payment of signature bonus was a setback for investors.”
In a departure from previous practices, the government now mandates that investors demonstrate financial capacity for exploration instead of remitting hefty sums as signature bonuses. “Rather than pay such monies into the coffers of the Federal Government, the investor must now be able to prove to us that they have the funds required to move into exploration,” Mr. Lokpobiri clarified.
Looking ahead, the Minister emphasized the imperative of expeditious utilization of awarded fields to maximize their potential. “What we have resolved going forward and with the 2024 oil bid round is to see that fields won in a bid round must be put into immediate use as against what obtained in past where fields are left idle after assets are won,” he stated.
The government’s decision to waive signature bonuses reflects a strategic effort to invigorate the oil sector, foster investor confidence, and propel Nigeria’s position as a prominent player in the global energy landscape.