Nigeria’s oil industry needs to rethink its approach to financing if the country is to meet ambitious production targets, according to Ainojie ‘Alex’ Irune, executive director at Oando and managing director of Oando Energy.
The senior oil executive at one of the nation’s largest indigenous producers told delegates at Nigeria’s International Energy Summit in Abuja that traditional funding mechanisms, including multilateral organisations, trading houses and reserve-based lending, may no longer provide sufficient capital to achieve the country’s oil production goals.
“We may have reached a point where to scale at the pace that we desire as a country, we may need to turn that on its head,” Irune said, highlighting a potential shift in strategy for an industry that has struggled to reverse years of declining output.
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Nigeria has set near-term production targets of 2million barrels per day and mid-term ambitions of 3million bpd, but Irune suggested these aspirations often lack accompanying cost assessments and clear pathways to secure necessary investment.
The West African nation currently produces about 1.5million bpd, well below its capacity and significantly less than the 2.5million bpd it achieved a decade ago.
The comments underscore growing frustration within Nigeria’s energy sector over the funding challenges that have hampered efforts to reverse production declines caused by aging infrastructure, theft, and underinvestment.
While technical capabilities remain strong, Irune emphasised that capital constraints have become the primary obstacle to growth.
“The technical part we’ve always been good at. That’s the one thing I don’t think anyone can take away from us,” he said. “The question is having the capital to back that execution.”
Irune called for a fundamental recalibration of financing strategies, suggesting Nigeria should explore government-to-government arrangements, particularly with eastern nations, and encourage international oil companies to deploy “patient capital” that accounts for the long gestation periods and technical complexities of Nigerian oil projects.
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The appeal for IOCs to reconsider their investment strategies reflects a broader tension in the sector. Major western oil companies have been divesting from onshore Nigerian assets in recent years, selling stakes to domestic players while retaining deepwater operations. These exits have been driven partly by concerns over security, regulatory uncertainty and environmental activism, as well as global pressure to reduce carbon emissions.
However, Irune insisted that indigenous Nigerian companies understand the imperatives of energy transition and carbon reduction, having been “trained by the best” international operators.
He argued that domestic producers are well-versed in creating governance structures attractive to international financiers, but stressed the need for better coordination across the entire ecosystem.
“We understand that perspective, and we understand the work that needs to be done,” Irune said. “The difficult part is really synchronising that with everyone else’s activities, whether it be the government, the other companies and the ecosystem.”
The executive highlighted recent improvements in regulatory coordination, noting that indigenous operators have established regular monthly meetings with the Nigerian National Petroleum Company and regulators to align on challenges, ambitions and progress. This represents a significant shift toward collaborative industry development.
“I don’t think the next phase of our growth as a country is going to be led by single stories,” Irure said. “I think it has to be a collaborative journey where policy meets the right commercial decisions on the right projects.”
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Nigeria’s ability to increase production carries significant implications for government finances, as oil revenues account for the bulk of foreign exchange earnings and a substantial portion of federal budgets. President Bola Tinubu’s administration has made reviving oil output a priority while simultaneously pushing reforms to reduce the sector’s dominance of the economy.
Irune emphasised that achieving Nigeria’s production goals requires not just new sources of capital but also continued improvements to the business environment.
“We need to get the regulations right, such as they’re friendly, and I think we’re on that path already,” he said, pointing to recent policy reforms, including the Petroleum Industry Act.
