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Petralon Energy and its founder, Ahonsi Unuigbe, are pushing back against a Federal High Court decision that upended the company’s hold on the Dawes Island asset, a case that has quickly become a test of Nigeria’s marginal field reforms.
The Africa Energy Chamber, led by executive chairman NJ Ayuk, called the ruling judicial overreach and warned it could weaken the country’s drill or drop policy, the system meant to force license holders to develop fields or surrender them.
The court judgment favored Eurafric Energy Ltd., reversing a 2020 decision by the Ministry of Petroleum Resources that declined to renew Eurafric’s license after regulators said it expired without commercial production. Petralon 54 Ltd. later took over the asset and began development in 2022, according to the chamber.
Petralon has appealed and sought a stay of execution while higher courts review the case, the chamber said, a move that would allow operations to continue pending the outcome.
Ayuk said the dispute is larger than one company’s license. He argued that Nigeria’s upstream recovery plan depends on consistent enforcement of regulatory decisions, particularly as the country tries to lift crude output and attract capital after years of underinvestment and theft related losses.
The chamber said Petralon invested about $60 million to drill two wells and build support facilities at Dawes Island within a year, even though the license terms required only one well commitment. It said more than 150,000 barrels have been produced and evacuated to the Bonny Terminal, and that royalty payments have already begun.
Unuigbe has positioned Petralon as part of a new class of Nigerian independents that regulators want to see succeed under the Petroleum Industry Act. The chamber’s statement described Petralon as a performance driven operator, pointing to drilling activity and early output as proof the drill or drop approach can work when firms are properly incentivized.
A central concern raised by the chamber is what it sees as retroactive application of the Petroleum Industry Act, which was enacted in August 2021, to events tied to an asset whose license expired in April 2019 and was declined for renewal in April 2020. The group said that kind of legal uncertainty is precisely what scares long term investors who fund multi year drilling programs.
The chamber also questioned how the court treated about 62,000 barrels produced during a well test, saying well testing is typically used to evaluate reservoir performance and does not amount to sustained commercial production without regulatory confirmation.
Petralon’s visibility in the Nigerian upstream sector has grown in recent years. The chamber said the company raised $60 million between 2021 and 2022 and has exposure beyond Dawes Island through an indirect stake in Prime Oil and Gas, which holds interests in deepwater blocks OML 127 and OML 130.
Ayuk said destabilizing operators after they have drilled, paid royalties and started evacuations sends what he called the wrong signal to the market, especially when the government is trying to scale domestic capacity and keep assets moving into production.
The outcome will likely shape how marginal field awards are viewed by financiers and local producers, with the appeal expected to determine whether Petralon can keep building on the output it says it has already delivered.
