NSE ANTHONY-UKO AND CHIKA IZUORA write that energy experts are pushing for a replacement to the Frontier Exploration Fund, warning that exploration activities in the Lake Chad Basin and Kolmani fields have slowed to a crawl.
Experts have warned that oil exploration in northern Nigeria could slow, as uncertainty over the Frontier Exploration Fund (FEF) threatens operations in basins such as Lake Chad and Kolmani.
Recall that President Bola Tinubu signed Executive Order 9 (EO9) on 13 February 2026, thereby suspending the 30 per cent frontier exploration deduction by the Nigerian National Petroleum Company Limited (NNPC), and directing oil and gas revenues to flow more directly to the Federation Account.
Before EO9, the Frontier Exploration Fund was handled as a deduction from NNPC Limited’s profit oil and profit gas under the Petroleum Industry Act, with the fund retained for frontier basin exploration rather than paid straight into the Federation Account.
The old arrangement allowed up to 30 per cent of oil and gas profits to be set aside for the fund and managed within the upstream revenue structure, rather than being fully remitted to the Federation Account. The idea was to provide a policy-backed funding stream for underexplored basins such as those in the North.
LEADERSHIP Sunday checks indicate that as of May 2026, oil exploration in northern Nigeria is active in planning and licensing, but there is little commercial production yet.
Further checks showed that the Nigerian Upstream Petroleum Regulatory Commission included the frontier basin (Lake Chad) blocks in its 2025 licensing round, even as the region is still far from becoming a major crude-producing hub.
Recall that the NUPRC offered 50 blocks in the 2025 licensing rounds, including four blocks in the Lake Chad basin northern frontier, signalling the government’s continued push to open up frontier basins.
However, reports from the regulatory commission showed that upstream activity has remained focused mainly on appraisal, development and licensing work rather than large-scale frontier drilling in the North.
The April 2026 rig-disposition report indicated that no exploration rigs were active nationwide, while development drilling accounted for most of the operating rigs, suggesting that exploration activity remained limited compared with production-focused work.
Data from the NUPRC rig-disposition report in April 2026 showed that Nigeria had 25 active rigs in its upstream operations.
Out of the 25 active rigs in April 2026, zero were recorded against exploration rigs.
A breakdown of the NUPRC rig-disposition table showed April figures of zero exploration rigs, 2 appraisal rigs, and 19 development rigs, with the balance made up by workover activity.
In the northern frontier, the Kolmani project in Bauchi and Gombe states remained one of the most prominent oil developments.
The project, which was flagged off by the late former President Muhammadu Buhari in November 2022, was still in the pipeline and had not yet entered sustained commercial production.
Reports also indicated that approvals and licences were being processed, while stakeholders continued to push for further drilling and infrastructure support.
The Lake Chad Basin also remained part of Nigeria’s northern oil story.
Historical reports showed that exploration in the basin had gone through several rounds of activity and suspension over the years, with renewed interest in recent times.
Officials had earlier suggested that the basin could hold significant oil potential. However, the area was still generally treated as a frontier zone requiring further appraisal before any major production could begin.
Industry observers said the inclusion of frontier basins in the 2025 licensing round signalled continued government interest in expanding exploration beyond the Niger Delta. They noted, however, that security, infrastructure and the high cost of developing remote basins remained major constraints.
Commenting on the development,
experts warned that suspending or restructuring the Frontier Exploration Fund (FEF) the suspension or restructuring of the Frontier Exploration Fund (FEF) under Executive Order 9 would slow activities in frontier basins such as Lake Chad and Kolmani unless a replacement funding mechanism is put in place immediately.
They said the fund had for years supported appraisal and exploration work in underexplored basins, especially in parts of Northern Nigeria that remain far behind the Niger Delta in commercial oil development.
Chief executive officer of Hyphen Partners Limited, Sola Adebawo, pointed out that Executive Order 9 represents an important intervention in Nigeria’s oil and gas fiscal governance architecture, particularly in the management of upstream petroleum revenues and frontier exploration funding.
From an industry perspective, Adebawo noted that the order appears to be driven primarily by the federal government’s desire to strengthen transparency, improve revenue remittance discipline, and ensure that deductions from federation revenues are subject to clearer appropriation and accountability processes. In that regard, the policy direction is understandable, especially within the broader context of fiscal pressures, public revenue optimisation, and ongoing reforms in the Nigerian oil and gas sector.
“However, frontier basin exploration is not a conventional short-cycle investment activity. It is inherently long-term, capital-intensive, technically uncertain, and heavily dependent on sustained funding continuity. The concern within industry circles is that suspending or restructuring dedicated frontier exploration funding could inadvertently weaken momentum in the inland basins unless an alternative, structured, and transparently funded mechanism is put in place.
“The practical implication is that exploration activities in frontier regions, particularly across parts of Northern Nigeria, including the Chad Basin, Sokoto Basin, Bida Basin, and Benue Trough systems, may now face a different operating dynamic. Historically, these basins relied significantly on policy-backed national strategic funding because they are still relatively underexplored compared to the Niger Delta,” he added.
Adebawo stressed further that, What Executive Order 9 potentially changes is the transition from an era of largely policy-driven frontier exploration to one that may increasingly require stronger commercial justification, deeper geological confidence, more disciplined capital allocation, and clearer economic viability thresholds.
“That could ultimately be positive for the industry if it leads to more technically rigorous exploration decisions and better investment discipline. However, there is also a risk that exploration momentum in the northern basins could slow if funding becomes vulnerable to annual budget cycles, competing fiscal priorities, or political uncertainty.
“In my view, Nigeria must avoid creating a false choice between fiscal accountability and frontier exploration. Both objectives are strategically important. The country still needs to deepen geological knowledge, expand reserves, and improve national energy security through basin diversification. But that exploration effort must now be anchored on transparency, technical quality, commercial realism, and long-term institutional consistency rather than purely political symbolism,” he added Adebawo.
He said, ultimately, the success or failure of Executive Order 9 will depend less on the announcement itself and more on how the government manages the transition framework that follows it, particularly regarding investor confidence, funding continuity, regulatory clarity, and a long-term exploration strategy for the inland basins.
In his view, Associate Research Professor of Law and International Legal Advisor with expertise in oil and gas, Dr Taiwo Adebola Ogunleye, said that Order, with its intent and purposes, should catalyse development to ensure that the country’s oil and gas industry remains resilient and sustainable.
He said the Order is meant to enhance transparency, cover identified gaps in the PIA, and make it easy to review when inappropriate forecasts and practices are identified.
“It is in the wisdom of the President to bring sanity and transparency through sustainable development processes, and the implementation team, with the Minister of Budget and Finance, who are coordinators of the project, as well as the Attorney General of the federal, are capable of advising the President through regular consultations and reports in the implementation process.
“The President can always make certain changes without going through legislative action, and that is the beauty of this process, and I am confident it will drive forward a clear vision for the industry “, he explained.
Nigeria is implementing significant fiscal reforms to revitalise its oil and gas sector, targeting $10 billion in investments and enhanced competitiveness by 2026.
Key changes include the Oil and Gas Companies (Tax Incentives, Exemptions, Remission, among others) Order 2024, and the Upstream Petroleum Operations (Cost Efficiency Incentives) Order 2025, which offer tax credits and incentives to boost production and attract foreign direct investment.
Ogunleye said these measures, aimed at optimising fiscal terms, include new tax reliefs for deep offshore projects to position Nigeria as a competitive investment destination.
In his view, the Order aims to accelerate the implementation of the PIA 2021, improve transparency, reduce operational costs, and increase revenue to the Federation Account.
According to Major Ogunleye, the Order No. 9 of 2026, signed on 13 February 2026, focuses on sanitising revenue flows within the oil and gas sector.
The order requires all Royalty Oil, Tax Oil, Profit Oil, and Profit Gas to be paid directly into the Federation Account.
It suspends the 30 per cent management fee on profit oil and profit gas, as well as the 30 per cent contribution to the Frontier Exploration Fund previously retained by NNPCL under the PIA, while compelling the NNPCL to operate strictly as a commercial entity, eliminating duplicative retention structures.
It further clarifies regulatory roles between the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
Reacting to the Order, Auwal Musa Rafsanjani, the Executive Director of Civil Society Legislative Advocacy Centre (CISLAC), called for extensive consultation and coordination of such project, as the negative effects of similar exploration in the Niger Delta region have rendered several areas significantly damaged,, as the negative effects of similar exploration in the Niger Delta region have rendered several areas significantly damaged with attendant pollution and health problems.
Rafsanjan said oil exploration in Nigeria has been a very unfortunate business venture that has not benefited the common people but has enriched a few while deepening poverty.
While commending the President’s good intentions regarding the Order, he noted, however, that frontier basin oil exploration requires robust environmental initiatives to mitigate risks in underexplored areas, particularly as Nigeria accelerates development in regions such as the Chad Basin, Benue Trough, and Sokoto Basin.
He said the Order would make a difference if regulatory agencies took the necessary measures to protect people’s livelihoods and ensure that revenue from the projects is evenly distributed across the country’s regions.
The Petroleum Industry Act 2021 (PIA) established a 30 per cent profit-sharing arrangement for the Frontier Exploration Fund (FEF), creating a legal imperative to integrate environmental safeguards into new exploration efforts.
He called for regular, thorough Environmental Impact Assessments (EIAs) of the identified sites, which he described as critical to ensuring adequate protection of sensitive habitats, fauna, and flora before operations begin.
He also urged adequate implementation of gas injection plants and technologies to reduce or eliminate associated gas flaring, strict adherence to site restoration protocols, with a requirement for comprehensive cleanup and restoration of the environment before and after exploration.
In particular, he urged strengthening agreements to manage environmental impacts, including ensuring that communities do not bear the cost of infrastructure repair due to negligence or inadequate maintenance.
