Nigeria marginal field dispute raises investor concerns after Dawes Island court ruling

The African Energy Chamber (AEC) has raised concerns over a recent Federal High Court ruling in Nigeria that reversed the 2020 revocation of the Dawes Island marginal field license, warning the decision could have broader implications for upstream investment and regulatory certainty. 

The judgment, delivered in favor of Eurafric Energy Limited, challenges the Ministry of Petroleum Resources’ earlier decision not to renew the company’s license after the asset remained without commercial production for more than a decade. Following the revocation, the license had been reassigned and developed by Petralon 54 Limited, which has since initiated production activities. An appeal has been filed by Petralon, with a stay of execution pending further court review.

According to the AEC, the ruling could complicate implementation of Nigeria’s “drill or drop” policy and other reforms aimed at accelerating marginal field development and boosting national output under the Petroleum Industry Act (PIA). The organization noted that applying provisions of the PIA retroactively to decisions made before its enactment may create uncertainty for investors evaluating long-term upstream projects.

The chamber also highlighted operational and contractual questions raised by the case, including the interpretation of limited well-test volumes as evidence of commercial production and the legal standing of unsigned farm-out agreements. It said such issues underscore the importance of clear regulatory processes and consistent application of petroleum laws in technically complex upstream developments.

Petralon has invested in drilling and field infrastructure since assuming operatorship of the asset, reporting initial production and royalty payments to the government. The company has indicated plans to further develop the field as part of broader efforts to increase domestic production and support Nigeria’s upstream growth targets.

The case comes as Nigeria seeks to attract new upstream investment through licensing rounds and policy reforms designed to improve production performance and regulatory transparency. Industry stakeholders say the outcome of the appeal and related proceedings will be closely watched by both domestic and international operators evaluating opportunities in the country.