By Emmanuel Nduka Obisue
The African Energy Chamber (AEC) has strongly condemned a Federal High Court judgment that overturned the 2020 revocation of the Dawes Island marginal field licence previously held by Eurafric Energy Limited, describing the ruling as judicial overreach with potential consequences for Nigeria’s upstream oil sector.
The court ruled against the Ministry of Petroleum Resources, reversing its decision not to renew Eurafric’s licence after it expired in April 2019 without achieving commercial production over 17 years. Following the revocation, Petralon 54 Limited took over the asset in 2022 and has since commenced development. Petralon has filed an appeal and secured a stay of execution pending determination by higher courts.
The AEC warned that the ruling could undermine regulatory certainty at a time when Nigeria is implementing reforms under the Petroleum Industry Act (PIA) and seeking to boost oil production.
According to the Chamber, applying provisions of the PIA that was enacted in August 2021 to decisions taken before its passage, raises concerns about retroactive interpretation of the law. It stressed that investors rely on stable legal and fiscal frameworks when committing capital to upstream projects.
The Chamber also questioned aspects of the court’s reasoning, particularly the recognition of approximately 62,000 barrels produced during a well test as evidence of commercial production. In standard industry practice, well testing is considered a technical evaluation rather than sustained commercial output, which requires regulatory approval. It further raised concerns over reliance on an unsigned farm-out agreement to establish legal interest.
Petralon, operating under Petroleum Prospecting Licence 259 (PPL 259), has invested about $60 million in the asset, drilling two wells, despite a one-well licence requirement, and installing supporting facilities. The company has produced and evacuated over 150,000 barrels to the Bonny Terminal and has commenced royalty payments to the government. It has also pledged to double production.
Nigeria’s Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, witnessed the commencement of the second well in November 2025, signaling government backing for the project.
“Petralon is a Nigerian independent that has followed every rule, complied with every regulation and worked hand-in-hand with government to increase production. They drilled. They invested. They paid royalties. They delivered results. To come at this time and derail that progress is unjust and sends the wrong signal to the market,” said NJ Ayuk, Executive Chairman of the AEC.
Ayuk added that the case goes beyond a single field, warning that inconsistent judicial decisions could discourage both local and foreign investment in Nigeria’s oil and gas sector.
Incorporated in 2014, Petralon holds one operated field and stakes in deepwater assets through a 6.06 percent indirect shareholding in Prime Oil & Gas, which has interests in OML 127 and OML 130, including the Agbami, Akpo, Egina and Preowei fields.
The AEC urged that the matter be resolved in a manner that protects regulatory stability and sustains Nigeria’s marginal field reform agenda.
The Dawes Island Marginal Field is an oil asset in Rivers State that was originally awarded to Eurafric Energy Limited as part of Nigeria’s marginal fields programme, which aims to develop smaller, under-produced oil blocks through indigenous operators.
In April 2020, the Department of Petroleum Resources acting for the Ministry of Petroleum Resources, revoked Eurafric’s licence on grounds of alleged non-performance and failure to develop the field despite efforts that reportedly included extended well testing and production of crude. The licence was subsequently re-awarded exclusively to Petralon 54 Limited under new marginal field licensing arrangements aligned with Nigeria’s Petroleum Industry Act 2021, a law intended to streamline upstream regulation and encourage investment in dormant fields.
Petralon invested in drilling and facilities and, by 2022, had been granted Petroleum Prospecting Licence 259 covering Dawes Island, signalling progress in re-establishing production.
However, Eurafric challenged the revocation and re-award in court, arguing that the government’s actions were unlawful, procedurally flawed and ignored its existing development activities and investments.
The latest judgment has broader implications for Nigeria’s marginal field policy, raising questions about legal certainty, regulatory process, and investor confidence in the upstream sector.
