The Nigerian oil and gas industry is undergoing a profound shift marked by a notable increase in the sale of assets. Industry insiders reveal that nearly ten onshore and shallow-water oil blocks, together containing close to two billion barrels of oil equivalent, are currently being prepared for divestment, indicating a significant realignment within the sector.
A recent study by Renaissance Capital Africa highlights that both Nigerian National Petroleum Company Limited (NNPC) are strategically retreating from mature onshore and swamp oil fields. Their attention is increasingly directed toward offshore and deepwater projects, which offer greater profitability and fewer operational challenges.
The report forecasts that additional divestitures from joint ventures between IOCs and NNPC will create opportunities for indigenous exploration and production (E&P) companies to acquire approximately 10 oil fields, with combined reserves estimated at around 2,008 million barrels of oil equivalent.
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The oil blocks targeted for sale are managed by prominent operators such as Chevron, TotalEnergies, and NNPC’s exploration subsidiary NEPL, all located within the prolific Niger Delta basin. These include OMLs 49, 50, 51, 55, 64/66, 65, 86/88, 100, 118 (Agbara), and 140, which together hold estimated reserves of 937 million barrels of oil and 6.4 trillion cubic feet of natural gas.
Rise of indigenous companies as dominant stakeholders
Experts in the field regard this wave of divestments as the third major phase in the evolution of Nigeria’s oil ownership landscape. This follows a decade-long pattern where IOCs have gradually exited, transferring billions of dollars in assets to Nigerian firms such as Aradel Holdings, Seplat Energy, Heirs Holdings, and ND Western.
Since 2020, Nigerian and regional E&P companies have injected over $7 billion into local oil assets, a development that has coincided with a marked reduction in oil theft and pipeline vandalism, according to the report titled ‘Nigeria Oil & Gas: Recovery on the Horizon.’
Renaissance Capital emphasizes that this shift toward indigenous ownership is unlocking new capital flows and operational flexibility after years of underinvestment. Companies like Aradel, Seplat, Heirs, and ND Western are actively investing in drilling, well re-entries, and field development, which could significantly enhance production output.
This transition is expected to solidify the onshore oil sector as predominantly controlled by Nigerian firms, while IOCs concentrate their efforts on offshore and deepwater exploration. In 2024, offshore and deepwater production accounted for 55% of Nigeria’s total oil output, surpassing the 45% from onshore and swamp regions.
Motivations behind IOC divestments
Multiple factors are prompting IOCs to divest from mature onshore assets, including commitments to environmental, social, and governance (ESG) standards, fixed investment horizons, and operational complexities.
Many IOCs have committed to the World Bank’s Zero Routine Flaring Initiative and adhere to Securities and Exchange Commission reporting requirements. Moreover, mature fields no longer necessitate foreign technical expertise or capital, diminishing the rationale for continued IOC involvement.
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Security concerns remain a significant challenge. The report reveals that transmission losses from production sites to export terminals reached nearly 90% between 2020 and 2024, largely due to pervasive oil theft in the Niger Delta.
Policy reforms have also been instrumental. The 2021 Petroleum Industry Act (PIA) introduced a ‘free entry and exit’ policy for investors, replacing previous bureaucratic obstacles that delayed asset transfers.
Improved regulatory frameworks like the PIA have streamlined investor participation in upstream activities, facilitating smoother transactions.
Recent landmark transactions, such as Shell Petroleum Development Company’s $2.4 billion sale to Renaissance Energy Group and Seplat’s $1.58 billion acquisition of Mobil Producing Nigeria Unlimited, were structured as leveraged buyouts. In these deals, the oil produced serves as collateral for seller-financed loans, with repayments made through crude deliveries.
Top ten assets marked for divestment
The ten blocks identified for sale include wholly owned NNPC subsidiaries and joint ventures with Chevron and TotalEnergies:
- OML 65 (COPDC) – 85 million barrels of oil equivalent (mmboe)
- OML 50 (NEPL) – 208 mmboe oil, 1,085 billion cubic feet (bcf) gas
- OML 86/88 (NEPL) – 204 mmboe oil, 3,838 bcf gas
- OML 118 (Agbara, Sigmund) – 3 mmboe oil, 189 bcf gas
- OML 51 (Yorla South, Chevron/NEPL) – 1 mmboe oil
- OML 140 (Chevron) – 110 mmboe oil
- OML 64/66 (NEPL) – 55 mmboe oil, 390 bcf gas
- OML 49 (Chevron/NEPL) – 69 mmboe oil, 93 bcf gas
- OML 55 (Belemaoil) – 40 mmboe oil, 580 bcf gas
- OML 100 (TotalEnergies) – 162 mmboe oil
Renaissance Capital describes these assets as a strong pipeline for the next wave of local mergers and acquisitions. These projects are financially attractive to investors and Nigerian banks, with indigenous companies increasingly tapping into domestic financing sources rather than relying solely on international lenders.
Currently, oil and gas assets constitute about 30% of Nigerian commercial banks’ loan portfolios, a proportion expected to rise as IOC divestments continue to benefit local E&P firms.
Financing the upcoming growth phase
Access to capital has traditionally been a barrier for Nigerian independent operators. However, Renaissance Capital expects that forthcoming asset sales will be supported by more sophisticated financing structures and enhanced governance standards.
Lessons from previous divestment cycles, including managing non-performing loans, have led to improved due diligence processes. These now incorporate ESG compliance strategies, verified off-taker agreements, and consistent production reporting to evaluate repayment capacity.
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Oando’s recent $375 million reserve-based lending facility from Afreximbank exemplifies the evolving financial environment supporting indigenous players.
Meanwhile, NNPC, now operating commercially under the PIA, is expected to optimize its asset portfolio ahead of a potential initial public offering (IPO). The medium-term plan focuses on asset optimization and governance reforms, with the company already securing growth capital and settling outstanding cash call debts with joint venture partners.
The PIA has also empowered regulators to expedite approvals and attract investment. For instance, the Reduction of Petroleum Sector Contracting Cycle (RPSCC) directive has shortened approval timelines for oilfield development plans to between 30 and 45 days, enabling faster project execution and supporting Nigeria’s medium-term crude and gas production goals.
Indicators of production recovery
After years of decline, Nigeria’s oil production is showing promising signs of revival. The number of active drilling rigs rose from 29 in January 2024 to 40 by September 2025, reaching levels not seen in recent years.
If this momentum continues, Nigeria is well-positioned to achieve or exceed its medium-term production targets. The government aims to increase output beyond two million barrels per day by 2026, supported by incentives under the PIA and greater domestic involvement.
The groundwork for growth is being established, and sustained efforts could transform Nigeria’s oil and gas sector into a more resilient and appealing investment destination.
Midstream advancements: Dangote Refinery and DCSO
Midstream developments are also reshaping Nigeria’s energy sector. The 650,000 barrels-per-day Dangote Refinery marks a significant milestone, while the Domestic Crude Supply Obligation (DCSO) guarantees a steady supply of local crude to the refinery.
The enforcement of the ‘no compliance, no exports’ policy makes the DCSO a mandatory operational requirement rather than a voluntary guideline. By replacing imports with domestically produced crude, the DCSO helps reduce foreign exchange outflows, stabilize the Naira, and alleviate inflationary pressures.
IMF estimates cited in the report suggest the refinery could improve Nigeria’s current account balance by $5.5 billion annually by retaining value addition within the country.
Gas sector opportunities and outlook
Nigeria’s vast gas reserves remain largely underexploited. With proven reserves of 193.3 trillion cubic feet, the country ranks among the world’s top ten but has yet to fully harness this resource.
Despite its enormous gas potential, Nigeria is not yet a leading gas producer. Key infrastructure projects such as the Ajaokuta-Kaduna-Kano (AKK) gas pipeline, now 84% complete, and the Nigeria LNG (NLNG) Train 7 expansion are central to the government’s ‘Decade of Gas’ industrialization strategy. The AKK pipeline will support domestic industrial growth and gas-to-power initiatives in Abuja, Kaduna, and Kano.
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A cautiously optimistic outlook
While challenges remain, Renaissance Capital maintains a cautiously optimistic view of Nigeria’s oil and gas sector. The ongoing transfer of onshore and shallow-water assets from IOCs to indigenous operators is reshaping the upstream landscape. Continued progress in these areas could foster a steady and sustainable recovery in production and value creation.