The African Vitality Chamber (AEC) has condemned a current Federal Excessive Court docket ruling that overturned the Ministry of Petroleum Assets’ 2020 revocation of the Dawes Island marginal subject licence, describing the judgment as a case of judicial overreach with probably damaging penalties for Nigeria’s upstream sector.
The ruling reinstated Eurafric Vitality Restricted’s licence, which had expired in April 2019 after 17 years with out attaining business manufacturing. The regulator had formally declined renewal in April 2020.
Since 2022, the asset has been held and developed by Petralon 54 Restricted. Petralon appealed the judgment and obtained a keep of execution pending a choice by increased courts.
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For the AEC, the problem prolonged past the destiny of a single marginal subject. The Chamber argued that the choice dangers undermining regulatory certainty at a time when Nigeria is implementing reforms below the Petroleum Trade Act (PIA) and in search of to revive manufacturing development and appeal to recent upstream capital.
Objections to authorized reasoning
Central to the Chamber’s condemnation is what it describes because the obvious retroactive utility of the PIA, enacted on 16 August 2021, to occasions that occurred earlier than its passage. Each the expiry of the Dawes Island licence in April 2019 and the regulator’s refusal to resume it in April 2020 have been actions taken below the authorized regime then in drive.
Making use of the PIA, the AEC argued, undermines the precept of authorized certainty that’s foundational to long-term oil and fuel funding. Upstream capital allocation is determined by readability of statutory frameworks, fiscal phrases and regulatory authority. Any notion that legal guidelines could also be utilized retroactively, the Chamber warns, introduces materials sovereign and regulatory danger.
“The ruling additionally raises operational considerations, significantly in its remedy of roughly 62,000 barrels produced throughout a nicely take a look at as proof of economic manufacturing,” the Chamber acknowledged.
In established upstream follow, nicely testing is a technical analysis of reservoir efficiency – not the graduation of sustained business manufacturing, which requires regulatory affirmation by a technical allowable, the AEC famous.
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“Moreover, reliance on an unsigned farm-out settlement to ascertain enforceable authorized curiosity departs from established contract legislation rules, below which unsigned paperwork don’t create binding obligations,” the Chamber acknowledged. “Taken collectively, the ruling dangers setting a precedent the place decrease courts intervene in technically complicated petroleum issues in a way inconsistent with regulatory follow and financial governance.”
Defence of Petralon’s document
The Chamber has backed Petralon 54 Restricted, describing the corporate as a compliant Nigerian unbiased that has delivered tangible outcomes since taking up the asset below Petroleum Prospecting License 259 (PPL 259).
Though the licence required solely a one-well dedication, Petralon invested roughly $60 million to drill two new wells and set up supporting services, bringing the sphere into manufacturing inside 12 months. Greater than 150,000 barrels have been produced and evacuated to the Bonny Terminal, with royalty funds already being remitted to the state.
The graduation of the second nicely in November 2025 was witnessed by Heineken Lokpobiri, the minister of State for Petroleum Assets (Oil), signalling alignment between the operator and authorities. Petralon has additionally pledged to double manufacturing on the asset.
For the AEC, these outcomes stand in sharp distinction to the sphere’s prior 17-year interval of non-production. The Chamber argued that Petralon’s execution validates Nigeria’s “drill or drop” coverage and helps the broader Undertaking One Million Barrels initiative geared toward boosting nationwide output. Disrupting such progress, it contends, sends a damaging sign to each home and worldwide buyers.
“Petralon is a Nigerian unbiased that has adopted each rule, complied with each regulation and labored hand-in-hand with the federal government to extend manufacturing,” mentioned NJ Ayuk, government chairman, AEC. He mentioned they drilled, “They invested. They paid royalties. They delivered outcomes. To return at the moment and derail that progress is unjust and sends the improper sign to the market.”
The Chamber emphasised that the dispute will not be merely about one marginal subject however in regards to the stability of Nigeria’s upstream funding atmosphere.
Petralon’s historical past of growth
Petralon, integrated in 2014, has constructed a diversified portfolio that features one operated subject and two non-operated deepwater belongings. Between 2021 and 2022, Petralon raised $60 million in capital, strengthening its stability sheet and positioning itself for upstream development. At the moment, the corporate holds one operated subject and two non-operated deepwater belongings.
By means of its oblique 6.06 p.c shareholding in Prime Oil & Gasoline, Petralon has publicity to OML 127 and OML 130. OML 127 incorporates the Agbami subject, whereas OML 130 consists of the Akpo, Egina and Preowei fields – a few of Nigeria’s most vital deepwater producing belongings.
“This isn’t nearly one subject. It’s about supporting Nigerian corporations which can be investing in Nigeria, creating jobs, rising manufacturing and strengthening our power safety. If Nigerian independents are positioned in a precarious place by inconsistent judicial selections, it’s going to deter each native and worldwide funding,” Ayuk added.
