Indigenous Companies Driving Growth
Nigeria’s energy sector is undergoing a transformation, led by indigenous oil firms and strategic policy shifts. Companies like Seplat, Oando, and Chappal are thriving due to government efforts to enhance the investment climate. These changes have earned praise from industry experts and stakeholders.
Experienced professionals, many with backgrounds in global oil corporations, now lead these independent firms. Their expertise positions Nigeria for increased oil and gas production, energy security, and industrial expansion.
Government-Led Reforms
Reforms in the oil and gas industry have long been necessary. Stakeholders have consistently pushed for changes to remove barriers that slow growth. President Bola Tinubu, also serving as Minister of Petroleum Resources, has reinforced his commitment to these reforms. His administration introduced three executive orders in 2024 aimed at stimulating energy investments, advancing gas development, and simplifying business operations.
Approving major asset divestments to indigenous companies signals the government’s support for local investment. Although these approvals faced long delays, they mark a shift toward fostering growth. Industry analysts have welcomed these reforms, emphasizing Nigeria’s need to align with global industry trends.
Strengthening Investment Prospects
Olu Verheijen, President Tinubu’s special adviser on energy, underscores the administration’s goal to unlock Nigeria’s energy potential. She highlights the creation of a dedicated Energy Office within the Presidency. This office is tasked with implementing reforms that position Nigeria as a top-tier investment hub.
Verheijen also clarifies that international oil companies (IOCs) are not exiting Nigeria. Instead, they are shifting their focus to deepwater projects. This move creates opportunities for ambitious local firms to develop onshore assets and drive production growth.
“The improved regulatory environment has allowed for long-pending divestment approvals, enabling IOCs to focus on deepwater exploration while indigenous firms take charge of onshore operations,” Verheijen explains. “This benefits everyone—IOCs leverage their expertise in offshore fields, while local companies expand production, ultimately strengthening Nigeria’s energy sector.”
Indigenous Players and Refining Expansion
The role of indigenous firms continues to grow. Renaissance, in particular, is emerging as a key player after acquiring Shell’s onshore assets. These companies are expected to increase oil and gas production for both domestic use and exports.
Nigeria’s refining capacity is also improving. The 600,000-barrel-per-day Dangote Refinery, along with modular refineries like WalterSmith and Aradel, will play a crucial role in boosting the sector. Additionally, state-owned refineries in Port Harcourt, Warri, and Kaduna are undergoing revitalization efforts.
Meeting Production Targets
Chief of Defence Staff (CDS), General Christopher Musa, recently emphasized the need for stakeholders to support the government’s target of 2.5 million barrels per day. He noted that while output has surpassed 1.8 million barrels per day, sustained effort is required.
“Oil production is essential for economic development,” Musa said. “Despite past setbacks, recent progress proves that collaboration is key to achieving the President’s production goals.”
Economic and Industry Benefits
These reforms are expected to yield multiple benefits, including higher oil and gas production, increased foreign earnings, a stronger Naira, and improved tax revenues. Enhanced gas availability will also boost power generation, benefiting businesses and households.
Additionally, greater competition in the refining sector could reduce fuel prices. The government remains focused on ensuring divested onshore assets contribute to national reserves and production capacity.
Key Asset Divestments
The Federal Government has approved five major divestments, allowing IOCs to concentrate on offshore operations. These transactions include:
- Shell Petroleum Development Company (SPDC) to Renaissance Group
- Mobil Producing Nigeria Unlimited (MPNU) to Seplat Energy Offshore Limited
- Equinor Nigeria Energy Company Limited to Project Odinmin Investments Limited
- Nigerian Agip Oil Company Limited to Oando Petroleum and Natural Gas Company Limited
- TotalEnergies EP Nigeria Limited to Telema Energies Nigeria Limited
Renaissance’s acquisition of Shell’s assets, valued at $1.3 billion, is particularly significant. Analysts believe the company’s expertise, workforce, and financial backing will reshape Nigeria’s energy industry.
Future Outlook and Challenges
As indigenous firms take over onshore assets, concerns remain about the government’s ability to meet its crude supply obligations to the Dangote Refinery. Existing commitments require a boost in domestic output to ensure a steady supply of 300,000 barrels per day.
Despite these challenges, additional refinery projects are underway. The upcoming 200,000-barrel-per-day BUA refinery in Akwa Ibom is expected to produce Euro-V standard fuels. Additionally, a South Korean consortium has announced plans to construct four 100,000-barrel refineries in Nigeria. If executed efficiently, these projects could elevate Nigeria’s global oil market standing while reducing reliance on imports.
Industry experts agree that these divestments mark a turning point. Indigenous firms now have the opportunity to build capacity, increase local participation, attract investment, and drive technology adoption. This shift will ultimately foster long-term economic growth, benefiting both Nigeria’s energy sector and the broader economy.
