President Bola Tinubu has dismantled a flagship oil exploration fund created under former President Muhammadu Buhari to finance crude searches in northern Nigeria, ending automatic allocations for frontier drilling and redirecting the money to the Federation Account.
The decision, contained in Order 9 of 2026 and now gazetted, removes a provision in the 2021 Petroleum Industry Act (PIA) that earmarked 30% of profit oil and profit gas from production sharing and related contracts for frontier basin exploration. Under the previous framework, the funds were managed by NNPC Ltd. to support oil searches in underexplored basins such as the Chad, Sokoto and Benue troughs.
Tinubu said the arrangement deprived federal, state and local governments of constitutionally due revenues.
“Effective February 13, 2026, I signed an Executive Order to restore what belongs to the Nigerian people,” Tinubu said in a national address. “The additional 30 per cent management fee and the 30 per cent Frontier Exploration deduction will no longer stand in the way of national revenue.”
Buhari’s Northern Oil Push
The frontier exploration fund was widely seen as central to Buhari’s ambition to find commercial oil outside the Niger Delta, particularly in the north.
In 2022, the Buhari administration formally launched crude oil drilling at the Kolmani River II well in the Kolmani area straddling Bauchi and Gombe states, a symbolic milestone in decades-long efforts to unlock northern hydrocarbon resources. The Kolmani project, hailed at the time as a breakthrough, was expected to anchor a new oil province and stimulate industrial development in the region.
Yet years after the high-profile launch, there has been no commercial oil production from Kolmani. Infrastructure development has stalled, and output has yet to materialize.
The PIA’s 30% frontier allocation effectively guaranteed a steady stream of upstream profits to fund such exploration campaigns, regardless of immediate fiscal pressures.
Recent oil block awards have also included acreage in the Lake Chad basin, another frontier region long targeted for hydrocarbon discovery. However, insecurity, geological uncertainty and high development costs have slowed progress, leaving the commercial outlook unclear.
A Fiscal Reset
Tinubu’s executive order halts the automatic diversion of those funds and directs that all Royalty Oil, Tax Oil, Profit Oil, Profit Gas and other government entitlements under production sharing contracts be paid directly into the Federation Account.
By eliminating the 30% frontier deduction, the president strengthens short-term government revenues at a time of persistent budget deficits, heavy debt servicing and suboptimal crude output.
“As we strengthen national security, invest in education, expand healthcare, stabilise the economy, and advance our energy transition, every legitimate naira due to the Federation must be protected,” Tinubu said.
The presidency has argued that dedicating such a large share of upstream profits to speculative exploration risked accumulating idle balances and encouraging inefficient spending, especially when oil earnings are needed to stabilize public finances.
Political and Regional Implications
The move carries political nuance. Frontier exploration was not only an economic project but also a symbol of regional equity and national integration under Buhari. Scrapping the guaranteed funding mechanism may raise concerns among northern stakeholders who saw oil discovery as transformative.
However, Tinubu has not prohibited exploration. Instead, he has removed the ring-fenced profit allocation and centralized revenues, potentially forcing frontier projects to compete within the broader federal budget framework.
The executive order also forms part of a wider plan to review the Petroleum Industry Act and reposition NNPC Ltd. strictly as a commercial operator.
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