Nigeria’s indigenous oil companies have embarked on an unprecedented buying spree, snapping up assets from departing Western majors for billions of dollars.
But the celebration may be premature, as BusinessDay’s findings have shown that sourcing the financial firepower to maintain aging infrastructure, develop new reserves, and meet environmental obligations in one of the world’s most challenging operating environments may be the hardest challenge.
According to The Economist, a British journal, most indigenous oil companies, with the notable exception of Seplat Energy, which maintains a London Stock Exchange listing, struggle to access the capital markets necessary for sustained growth.
Read also: Nigeria retains Africa oil king title as rivals stumble Wood Mackenzie
One industry expert who pleaded anonymity quoted by the publication was blunt in their assessment, noting that many companies lack the capital to bring oil into production despite ambitious rhetoric.
“There’s a lot of talk,” he said. “But a lot of these guys don’t actually have the capital to bring oil to production.”
Wood Mackenzie, a research and consulting firm, said: “Indigenous companies have taken on considerable debt to acquire assets.”
“But there is limited capacity for debt-fuelled growth, particularly in what remains one of the higher-cost and higher-risk oil and gas plays,” Wood Mackenzie said.
Renaissance Energy, a consortium of mostly Nigerian firms, took control of Shell’s onshore operations in March. Seplat acquired ExxonMobil’s onshore and shallow-water licenses for $1.3 billion last year. Oando paid $783 million for four blocks from Italy’s ENI and pledged to invest $2 billion more by decade’s end. In 2025, domestic producers surpassed global firms in output share for the first time since commercial production began.
“Everyone is super-excited,” said Emmanuel Uwandu, a local energy entrepreneur, describing the mood around the government’s latest licensing round in December, which attracted interest from Chevron and TotalEnergies. Officials project the auction will generate roughly $10 billion over the next decade.
“Some assets now under indigenous control require substantial capital expenditure that goes beyond incremental upgrades,” Afolabi Akinrogunde, a senior energy executive with over 20 years of experience, said in a note.
He noted that gas processing plants, compression facilities, evacuation infrastructure, and development drilling programmes demand financing structures with longer tenors and more complex risk allocation.
“These projects require hundreds of millions of dollars in combined equity and project finance, backed by credible execution capacity and long-term offtake frameworks,” Akinrogunde added.
Seplat Energy, widely considered the most financially robust of Nigeria’s indigenous operators, funded its ExxonMobil acquisition with cash and debt, maintaining a healthy debt-to-equity ratio of around 0.77. It now plans to invest up to $3 billion over five years to develop the purchased assets and boost production to 200,000 barrels per day equivalent, a 50 percent increase.
Read also: Nigeria’s crude oil output slips to 1.42mbpd in December, misses OPEC quota again
Yet, even Seplat’s ambitions raise eyebrows. Its 2024 operations generated less than $400 million in cash flow, and it held just over $400 million in cash as of mid-2025.
Analysts say assembling $3 billion will require either sustained high oil prices or additional borrowing.
Other indigenous operators face far tighter constraints. Oando, which has not paid a dividend in nearly a decade, posted an operating loss in the first nine months of 2025 despite soaring revenue.
The broader sector paints an equally challenging picture. Nigeria lost $6.8 billion in potential revenue between January and August 2025 due to production shortfalls, with actual output averaging 1.673 million barrels per day against a budget target of 2.06 million. Oil theft, pipeline vandalism, and lack of investment continue to plague the industry.
International capital markets remain skeptical. While Seplat Energy successfully refinanced $650 million in debt in early 2025 at a 9.125 percent coupon, pricing its bonds inside Nigerian sovereign debt for the first time, most indigenous firms lack similar access.
Traditional Western banks have largely retreated from oil and gas financing in Africa, citing environmental concerns and high-country risk.
Government officials acknowledge the funding challenge. Heineken Lokpobiri, minister of state for Petroleum Resources (Oil), admitted that “access to finance has hindered investment in the upstream sector especially for Nigerian companies,” though he expressed optimism about the proposed $5 billion Africa Energy Bank to be hosted in Nigeria.
That bank, however, remains more aspiration than reality. Nigeria has met its financial commitments, but the institution has yet to begin operations. Even if it launches successfully, $5 billion barely covers the near-term capital requirements of a sector that needs tens of billions over the coming decade.
The arithmetic is brutal. Nigeria’s oil sector received $136.6 billion in bank credit in 2024, representing 35.7 percent of total private sector lending.
Yet, most of that money flows to NNPC and its joint venture obligations, not to the indigenous firms expected to drive production growth. Smaller operators struggle to secure financing at reasonable rates, particularly for the riskier onshore assets that international majors abandoned.
“Indigenous operators must operate at or above the standards previously set by international oil companies,” Akinrogunde said.
“That means stronger boards, transparent reporting, rigorous safety systems, disciplined capital allocation, and long-term planning horizons. Some operators have made meaningful progress. Many others have not yet,” he added.
Read also: Shares of US oil companies jump after Venezuela operation
Nigeria’s average daily crude output reached 1.47 million barrels in 2025, the highest level in five years, according to consultancy firm, Rystad. That’s up from a two-decade low in 2022, when theft, vandalism, and security concerns drove production down sharply.
President Bola Tinubu, himself a former ExxonMobil employee, who took office in 2023, has set an ambitious target of doubling output to three million barrels daily by 2030, which would place Nigeria among the world’s top ten producers.
