Indigenous Nigerian oil and gas operators have noted that the divestment by international oil companies (IOCs) from Nigeria’s onshore and shallow water terrains could enable the country to unlock over 500 million barrels of oil and more than three trillion cubic feet (TCF) of gas reserves if the transition is effectively managed by the government.
They highlighted the effects of a 15-year period of under-investment in the sector, which they attribute to the drop in Nigeria’s oil production from a peak of 2.6 million barrels per day (bpd) to the current level of 1.5 million bpd. The operators called for an updated and robust regulatory framework, as well as a review of the Petroleum Industry Act (PIA), to better meet the needs of an industry that has expanded from fewer than 15 operators to 50 today, in addition to addressing the challenges posed by energy transition and associated funding constraints.
At the Pre-conference Workshop of the Nigerian Association of Petroleum Explorationists (NAPE) in Lagos, various industry leaders, including Aradel Holdings CEO Mr. Adegbite Falade; Seplat Energy COO Mr. Sam Ezugworie; Britannia-U CEO Mrs. Uju Ifejika; and Heirs Energies Limited CEO Mr. Osayande Igiehon, shared their perspectives. The event focused on the theme: “Leveraging Divestment and Local Content Capacity to Enhance Nigeria’s Oil and Gas Industry: Challenges and Opportunities.”
In his presentation, Mr. Falade sought to reassure stakeholders about IOC divestment, emphasising that “divestment has the potential to unlock over 500 million barrels of oil reserve and over three trillion cubic feet of gas reserve in Nigeria. So, divestment is not bad for the sector, and we need to embrace it.” He attributed the decline in production to a “deliberate under-investment in the oil and gas industry in the last 15 years.”
Falade also advocated for a review of the regulatory structure within the Nigerian oil and gas sector, noting that “regulators have not scaled up in the past 20 years to meet the demands of an industry that has grown from about 15 operators to 50.”
Seplat COO, Mr. Ezugworie, expressed regret over the stagnation of Nigeria’s oil production at 1.5 million bpd, despite the increase in indigenous operators. He observed that IOCs were shifting focus to offshore and deepwater projects, leaving onshore and shallow water blocks. Ezugworie called for Nigeria to capitalise on the divestment by supporting the growth of capable local firms, mentioning that companies like Seplat, Aradel, First E&P, Waltersmith, and Platform Petroleum — known as the “Big 5” — could play a crucial role. He questioned whether the PIA had attracted significant investment since its 2021 enactment, asserting that “there must be Key Performance Indicators (KPIs) to measure the success of regulations in the industry.”
Britannia-U CEO Mrs. Ifejika urged regulators to be proactive in addressing emerging challenges in Nigeria’s upstream sector. She noted that, of the 24 companies awarded marginal fields during the 2003/2004 bid round, only seven have recorded success. Furthermore, she stated that “even the last marginal field bid round conducted in 2020 has not produced any good result,” as none of the awarded fields have yet achieved first oil. Ifejika appealed to the government to reverse the industry’s investment and production decline by implementing favorable fiscal terms and adopting a pragmatic regulatory approach.
Mr. Igiehon, CEO of Heirs Energies Limited, observed that Nigeria’s oil and gas industry is experiencing a significant transition from IOCs to local operators. Represented by Heirs Energies’ CFO Mr. Sam Nwanze, he explained that the divestment trend, which began 20 years ago, has expanded in scope and complexity. He noted, “This creates an opportunity for growth as indigenous players have the opportunity to better balance risk and growth. Local content policies provide more jobs for Nigerians and improve workforce capabilities, reducing reliance on foreign expertise.”
Igiehon further highlighted that divestment allows indigenous companies to embrace new technologies, increasing operational efficiency and cost savings, while also creating demand for local suppliers, service providers, and subcontractors, which strengthens the broader Nigerian oil and gas ecosystem.
However, Igiehon acknowledged that the path to leveraging divestment and local content in Nigeria’s oil sector is fraught with challenges, including funding constraints. He pointed out that “access to capital for local companies to acquire assets has been challenging,” alongside issues like financial discipline, management, and operational capacity gaps that hinder the country’s ability to maximise divestment opportunities. He concluded by stressing the need for better infrastructure, including transportation and processing facilities, to support local operators and adapt to the commercial shift, particularly for gas.
