- Contribute 27% of country’s production from 12% a decade ago
- Financing remains major obstacle
- More gov’t investment boost required
Nigeria now leads the rest of Africa with eight of the continent’s top 10 independent oil and gas producers domiciled in the country. These independent oil and gas producers are helping to reinvigorate the country’s upstream sector and boost production after years of decline, according to a report by Wood Mackenzie.
Among the eight are: Renaissance, Seplat, Aradel Holdings, ND Western, Vaaris Resources, First E&P, Oando, and Famfa Oil.
These energy companies now contribute some 27 percent of Nigeria’s overall production, which is a sharp rise from 12 percent a decade ago.
At a recent Wood Mackenzie’s briefing in Lagos, the mood among the independents was optimistic, though there are challenges that lie ahead, the report noted.
Simon Flowers, chief analyst, and Gavin Thompson, vice chairman, energy – Europe, Middle East & Africa, both energy analysts at Wood Mackenzie, who jointly produced the report, however raised the question whether these indigenous oil and gas producers can step up the steam, given Nigeria’s lofty oil and gas growth targets. The federal government has set a 2030 production target of three million barrels per day (bpd)
Growth drivers
The analysts noted that the growth drivers among the Nigerian independent producers include right place, right time, ambitious and entrepreneurial local companies leaping upon a unique set of circumstances, amid divestment by IOCs of their non-core onshore and shallow-water portfolios.
Other catalysts that helped underpin the growth include: supportive government policies and a strong domestic skills base ― often acquired from the leading international oil companies. Today, Nigeria has over 100 local players active across its upstream sector, making it boast as Africa’s most diverse corporate landscape.
Importance of Nigeria’s independents
The report also noted that the place of independent oil and gas producers in the country is quite critical, especially given that structurally lower investment has resulted in Nigeria’s liquids production falling from above two million barrels per day a decade ago to around 1.6 million bpd currently. Now, the government has set an ambitious three million barrels per day (bpd) target by 2030.
“The indigenous companies, no doubt, are playing their part. Today, they contribute more than a quarter of total domestic oil production, bolstered by post-mergers and acquisition (M&A) development activity, and increased output from marginal fields,” the report stated.
In addition, smarter operating models, higher risk tolerance and close relationships with the federal government and state-owned Nigerian National Petroleum Company Limited (NNPCL) have provided competitive advantages to the independents, according to the report.
Indeed, as a result of this, the report observed that Nigeria’s independents now make up eight of the top 10 indigenous African producers, with Renaissance Africa Energy and Seplat Energy at the top of the pile. With a combined value of $12 billion, Nigerian companies represent around 75 percent of the African independents peer group value, the Wood Mackenzie’s report said.
Future plans
To wit, Nigeria’s independents do not lack ambition. Renaissance, Seplat and Oando JVs are targeting around $35 billion spending on greenfield and brownfield activities aimed at boosting output. Presidential directives intended to unlock growth in gas development are also offering the independents opportunities that hold around one-third of Nigeria’s gas reserves. The continued high grading of the Majors’ portfolios could also deliver more opportunities in onshore and shallow water developments, while M&A activity may evolve to include consolidation within the indigenous peer group.
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Licensing can also play part in future expansions. The 2025 licensing round, which concludes in Q4 2026, focuses on discovered resource opportunities in the established oil producing Niger Delta hubs. However, the local producers have raised concerns around data reliability and the marginal nature of available assets.
Possible hindrances to future investment
Barring any unforeseen events, analysts believe that financing still remains a major obstacle to the Nigerian independents’ future growth. Without the luxury of large balance sheets, the independents are challenged with financing late-life projects in a high-risk environment, the Niger Delta. To wit, more than half of Nigeria’s oil production are in fields that started up before 2000. Hence, the Wood Mackenzie analysts posit that operating depleted and marginal fields will become increasingly difficult cost-wise.
Operating costs for Nigerian independents average about $15/boe, the highest across Africa. While the county’s diverse corporate landscape has helped reinvigorate the sector, it also brings complexity and risk to operations and project execution, the analysts said.
More government investment boost expected
More action is needed to reduce risk such as increasing facility uptime, accelerating project approvals and ensuring security, aside laws promoting local content, a new regulator to enforce them, catalysing domestic company participation, and the competitive licensing framework, which characteristically issues smaller block sizes.
Wood Mackenzie says, without further improvements, Nigeria risks shortening investment by its independents. Moreover, some of them with substantial resources are already looking beyond Nigeria for growth. The current high oil prices offer a massive opportunity to increase domestic production for the indigenous players. Losing this investment to other markets should not be an option, the analysts warned.
IOCs to retreat into Nigeria deepwater
Analysts feel the current Nigerian domestic growth does not explain IOC’s Nigeria retreat. Rather, the Big Oils would retreat into Nigeria’s deepwater. Besides, the IOCs’ joint venture divestment programmes are nearing completion, with the Renaissance JV seeing TotalEnergies’ sale of its equity interest awaiting completion, and Eni’s anticipated exit reportedly in progress.
Once done, the oil Majors will focus on greenfield deepwater projects into the Nigerian LNG facility. For example, Shell announced in 2024 of its deepwater Bonga North project final investment decision, Nigeria’s first in more than a decade. Expected to follow are: Bonga South West Aparo (Shell-operated), Usan West and Owowo West (ExxonMobil-operated), Etan Zabazaba (Eni-operated) and the shallow-water Ima Gas Field (TotalEnergies 40 percent participation). These are backed by supportive fiscal policies.
