Won an oil block, or bidding in 2026? Your consortium agreement matters more than your bid

On 21 July 2026, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) announced 31 winners of 37 oil and gas blocks in the 2025 licensing round, the third round run under the Petroleum Industry Act. The round had offered 50 blocks across onshore, shallow water, deep offshore and frontier basins.

Winning was the easy part. Before a licence is issued, each winner must provide guarantees, pay a signature bonus and the first year’s rent, and sign the contract documents. The Minister’s approval also has to come through. The NUPRC has said winners have 90 days from their offer letters to meet the conditions, or they forfeit the block. Depending on when offer letters went out, many winners are inside that window now.

The President has also approved a 2026 round. For anyone planning to bid, the work that decides success starts now, not at the bid deadline.

How the round was built for consortia

The rules let bidders team up. Consortium members could add their financial capacity together to meet the thresholds (US$100 million for deep offshore, US$40 million for onshore and shallow water), provided their commitments were set out in a contract. The designated operator had to hold a 30% interest. Foreign bidders could join but had to set up a Nigerian company before award. Signature bonuses ran from US$3 million to US$7 million, backed by a bank bond worth 5% of the bonus.

Those rules make sense. They also create the five places where consortia most often fall apart.

Where consortia break

1. The cash call. Who pays the signature bonus, how much, and by when? If one partner cannot fund its share inside the 90 days, every partner can lose the block. The agreement needs a funding schedule and clear consequences for a partner who defaults: dilution, loss of voting rights, or a forced sale of its share to the others.

2. The paper partner. Some members were brought in for their balance sheet, to help the group qualify. Their capacity was counted. Now they must actually commit it. If that commitment was vague, expect a dispute.

3. The operator’s 30%. The operator does the technical work and must hold 30%. Smaller partners often assume the operator will carry their costs. If anyone is being carried, the agreement must say who, for how long, and how it is paid back.

4. Drill or drop. The NUPRC has said it will enforce the Petroleum Industry Act’s drill-or-drop principle, so undeveloped acreage can be taken back. The consortium needs firm rules for approving work programmes and budgets, and a way forward when partners disagree, such as letting willing partners proceed at their own risk.

5. Exit and disputes. Who can sell, to whom, and with whose consent? What happens if a partner changes owners? And where do disputes go? A clause that sends every disagreement straight to expensive international arbitration is rarely the right tool for a cash-call fight that must be settled in days.

Our view

Too many indigenous consortia bid on the strength of a memorandum of understanding and plan to “do the joint operating agreement later”. The 90-day window means later has arrived. The NUPRC has said it will judge the round by how quickly blocks move from award to seismic, drilling and production. Consortia that settled money, control and exit before they bid will move. Those that did not will spend the window negotiating with each other.

What to do

Winners inside the 90-day window

• List every award condition, assign each to a named partner and set an internal deadline well before the regulator’s.

• Turn the bidding memorandum into a binding agreement now. It should cover funding, defaults, the operator’s role, voting and transfers.

• Start the bank guarantee process early. Banks take time, and the clock does not stop.

Bidders preparing for the 2026 round

• Negotiate the consortium agreement before you register, not after you win.

• Test each partner’s commitment with proof of funds or a signed guarantee commitment, not a letter of comfort.

• Agree who operates, and on what terms, before anyone signs a bid.

• Choose a dispute clause that fits the dispute you are most likely to have.