Oil output race tilts in favour of local firms after 70 years

…Renaissance grows output by 100%

Nigerian indigenous oil companies have overtaken international counterparts in production volume, now accounting for more than 50% of the nation’s total oil and gas output in the last 70 years.

This shift, fuelled by an accelerating wave of asset divestments from multinational oil companies, marks a fundamental restructuring of Nigeria’s energy landscape, a threshold never previously achieved since commercial oil production began in 1956.

“For the first time, indigenous producers and independents now account for more than 50 percent of national production, “Adegbite Falade, chairman of the Independent Petroleum Producer Group, said at the opening ceremony of the Nigerian International Energy Summit in Abuja on Tuesday.

Falade added, “This represents a historic transformation in the structure and control of Nigeria’s oil and gas sector.”

For Heineken Lokpobiri, minister of state for petroleum resources, the milestone has been driven largely by major divestments of onshore and shallow-water assets by international oil companies, including Shell, ExxonMobil, and Eni, to indigenous players such as Seplat, Oando, and Renaissance.

These transfers have injected an additional 200,000 barrels per day into national production, according to Lokpobiri.

“From Shell to Renaissance, ExxonMobil to Seplat, Eni to Oando, these are not just transfers of assets, they are transfers of confidence, capability, and ownership,” Lokpobiri said, highlighting transactions that were stalled for years before being expedited under President Bola Ahmed Tinubu’s administration.

Lokpobiri said Renaissance, one of the beneficiaries of the divestment wave, has doubled its production capacity, delivering 100 per cent output growth as indigenous operators demonstrate their ability to extract value from assets previously managed by international majors.

The surge in local ownership comes as Nigeria battles to reverse years of production decline caused by crude theft, pipeline vandalism, and underinvestment.

National output has languished below the country’s OPEC quota for much of the past decade, costing the government billions in lost revenue.

Industry executives credited improved security, regulatory reforms, and sustained implementation of the Petroleum Industry Act, enacted in 2021 after nearly two decades of legislative gridlock, with creating conditions for the indigenous sector’s ascendancy.

“Oil production in the upstream sector has been scaled up significantly, supported by increasing export pipeline availability, reduced crude losses and stronger indigenous contribution to production,” Falade said, praising government efforts to rebuild investor confidence through appropriate executive orders and accelerated approval processes.

The divestment trend reflects a broader global realignment as international oil companies retreat from onshore operations in developing markets to focus on deepwater projects and renewable energy transitions.

In Nigeria, majors have cited operational challenges, security concerns, and ageing infrastructure as reasons for exiting assets they once considered crown jewels.

For indigenous companies, the acquisitions represent both opportunity and challenge. While gaining control of significant reserves and production capacity, they inherit complex operational environments, substantial decommissioning liabilities, and the need for continued capital investment to sustain output.

Falade acknowledged these headwinds, emphasising that Nigeria must address structural cost disadvantages and improve access to affordable long-term capital if indigenous operators are to remain competitive.

“Our industry today operates at a significantly elevated premium in cost relative to other constrained jurisdictions,” he warned. “We must address the issue of access to long-term and affordable capital.”

He called for sustained focus on attracting private investment, reducing bureaucracy, and streamlining industry fees to ensure operators can compete globally, challenges that will test whether indigenous companies can build on their newfound dominance.

The transformation also carries geopolitical implications. Nigeria, Africa’s most populous nation and top oil exporter, has long chafed at foreign control of its primary economic resource.

Gas production has also expanded significantly under indigenous stewardship, Falade noted, supporting Nigeria’s ambitions to monetise vast untapped reserves and position itself as a regional energy hub.