Oil Bloc: FG Removes Signature Bonus to Woo Investors

In a bid to attract fresh investments and ramp up oil output, the Federal Government yesterday, announced the removal of the signature bonus requirement in bidding for oil blocks.

Minister of State for Petroleum Resources, and Oil, Mr Heineken Lokpobiri, disclosed this on the sidelines of the ongoing 2024 Offshore Technology Conference, OTC, in Houston, Texas.

A signature bonus is a single, non-recoverable lump sum payment made upfront by oil companies to the government for the rights to develop an oil block commercially after successfully winning in the license bid round.

The minister assured investors that oil will remain relevant in Nigeria’s economy for a long time and that the government is creating an enabling environment that will attract the best of investments into the country.

Lokpobiri, who urged investors to take the opportunity of the oil bid round to make an investment, said: “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.

“We are here at OTC to show the rest of the world that Nigeria is different and our government is different, in creating the best regulatory framework, allowing competitiveness, and removing all the investment barriers.

“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.”

Announcing the removal of the signature bonus, Lokpobiri said over the years, payment of signature bonuses remained a huge bottleneck for investors as well as investment into the sector.

“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,’’ the minister added.

He said to ensure investors have a soft landing, such payments will now be tied to immediate exploration and production activities by new entrants.

Lokpobiri noted: “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.

“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 said the new strategy will create jobs and boost activities in the upstream oil sector.