On 5 May 2025, the Nigerian Upstream Petroleum Regulatory Commission (the NUPRC or the Commission), further to its powers under the Petroleum Industry Act 2021 (the PIA), issued the Nigerian Upstream Petroleum (Commercial) Regulations 2025 (the Regulations). The Regulations provide a framework for regulatory approval and oversight of commercial activities in upstream petroleum operations, specifically as it relates to field development plan and annual work programme.
These Regulations set out new requirements for the approval of Field Development Plans (FDPs), Phase Development Plans (PDPs), and Annual Work Programmes (AWPs), including commercial viability tests, cost benchmarks, and stricter reporting standards.
Operators must now meet rigorous approval thresholds for project planning and execution, backed by financial modelling, risk forecasting, and ROI analysis. The framework aims to improve cost efficiency, ensure compliance, and attract sustained investment in Nigeria’s oil and gas sector.
In this newsletter, we outline the key provisions of the Regulations and their implications for stakeholders. Read the full newsletter to explore the key compliance triggers, penalty regime, and strategic insights for navigating the new regulatory landscape.
Who the upstream commercial regulations apply to
The Regulations took effect on 5 May 2025. They cover licences and leases granted under the PIA. They also cover existing licences and leases the PIA preserves, namely oil exploration licences, oil prospecting licences and oil mining leases.
Field development plans and phase development plans
Under the PIA, a licensee must submit a field development plan (FDP) within two years of declaring a commercial discovery. Otherwise, it must relinquish the area containing that discovery.
The PIA also allows development in phases. The FDP sets out the first phase in detail and later phases at a high level. When the licensee is ready to commit to a later phase, it submits an amended FDP or a Phase Development Plan (PDP) for approval.
Each application must include the scope of the plan and its work breakdown structure, together with work activities, deliverables and milestones. It must also include projected annual production and price estimates, plus annual cost estimates on a -10% lower case, base case and +20% case. Those costs cover acquisition, royalties, production, operations, decommissioning, finance, depreciation and capital spending.
How the NUPRC evaluates a plan
The Commission will approve the commercial aspects of an FDP or PDP based on several tests:
- estimated cost within the -10% base case and +20% pessimistic range;
- revenue and expenditure forecasts that show potential for maximum economic recovery;
- a positive return on investment compared with opportunity cost;
- benchmarks against similar projects and international practice; and
- a positive Economic Value Added.
To measure profitability, the NUPRC will use Net Present Value, Internal Rate of Return, break-even analysis, return on investment and sensitivity analysis. Importantly, any cost overrun above the +20% gate needs the Commission’s prior approval through an amended plan.
Annual work programmes
Every licence or lease holder, or the operator of a jointly held asset, must submit an Annual Work Programme (AWP) and status report between 15 October and 16 November each year. The application attracts a $1,000 fee, and the approved AWP runs from 1 January to 31 December.
The AWP is binding in practice. Generally, no activity may take place unless the approved AWP includes it, and spending on unlisted activity will not count as eligible expenditure. The one exception covers health and safety emergencies. In that case, the holder must notify the Commission within 48 hours and then apply to amend the AWP.
The application must list proposed activities and timelines, including host community, manpower and Nigerian content initiatives. It must also include cost estimates, the previous year’s performance report, payment evidence, reserves information, production forecasts, details of any court orders, the organisational structure and a five-year strategic plan.
The Commission will approve an AWP that is commercially viable within its cost benchmarks, operationally feasible and environmentally compliant. The holder must also have met its payment obligations and disclosed its beneficial ownership. We expect the NUPRC to set its benchmarks with the 2025 Executive Order on cost efficiency incentives in mind. A holder may seek review of any AWP decision.
For operators, the practical message is to build cost discipline and documentation into every plan from the outset. Our notes on acreage relinquishment under the Petroleum Industry Act 2021 and our Oil and Gas 2025 Wrap-Up and 2026 Outlook cover related upstream developments.
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