Nigeria’s oil divestment: A missed opportunity for reform?

Nigeria’s oil sector stands at a critical juncture. The divestment of international oil companies (IOCs) from onshore and shallow water assets in the Niger Delta should, in theory, mark a pivotal moment for the country’s energy sector. Yet the reality is far less promising. The exodus of major players like Shell, ExxonMobil, and TotalEnergies, alongside a recent wave of approvals for indigenous ownership, has been marred by an opaque and protracted regulatory process that threatens to derail the potential benefits of these transactions.

 “Such delays send a troubling message to global investors about the ease of doing business in Nigeria—particularly in an industry where time-sensitive transactions are critical to maintaining operational continuity.”

For years, Nigeria’s upstream regulatory framework has been hampered by inefficiencies and a tendency toward bureaucratic delays. The country’s Nigeria Upstream Petroleum Regulatory Commission (NUPRC), while tasked with ensuring compliance and due diligence, has been slow to approve divestments. Most notably, the sale of ExxonMobil’s assets to Seplat Energy has languished, as have similar deals involving Shell and TotalEnergies. Such delays send a troubling message to global investors about the ease of doing business in Nigeria—particularly in an industry where time-sensitive transactions are critical to maintaining operational continuity.

President Bola Tinubu’s reference to the ExxonMobil divestment in his Independence Day speech only underscores the severity of the issue. It is unusual for a routine corporate transaction to warrant mention in a national address, yet the delays in securing approvals have turned this private sale into a matter of public importance. The fundamental problem here is that what should be a straightforward transfer of assets has been unnecessarily complicated by regulatory inertia.

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This inertia comes at a cost. Nigeria’s oil sector has long been in decline, hampered by militant activity, theft, and outdated infrastructure. The divestments represent an opportunity for indigenous firms to step in and revitalise the sector, but without swift regulatory approvals, these firms cannot begin the work necessary to boost production and generate revenue. The delays also deter future foreign investment—a critical lifeline for a nation struggling with mounting economic challenges.

There are broader implications as well. The shift toward indigenous ownership, while potentially empowering for local companies, raises questions about capacity. Are these firms equipped to manage complex oil operations, and do they possess the financial and technical wherewithal to drive growth in the sector? The answer is not yet clear. Furthermore, the divestments have yet to address the environmental and social legacies of the IOCs’ decades-long presence in the Niger Delta, a region still reeling from pollution, underdevelopment, and unrest.

The government’s priority should be to streamline the approval process, ensuring it is transparent, predictable, and efficient. Nigeria cannot afford to prolong these transactions or let regulatory hurdles stifle the potential benefits. A more dynamic approach is needed—one that leverages technology to expedite approvals, introduces clearer guidelines for compliance, and fosters stronger collaboration between government, industry, and local communities.

In addition, the divestment process must be accompanied by a comprehensive plan to address the Niger Delta’s socio-environmental challenges. Indigenous firms must be held to higher standards of corporate responsibility and must be transparent about their commitments to sustainable development in the region. Failure to do so will merely replicate the mistakes of the past, leaving the Delta’s communities with little to show for this latest wave of transactions.

Nigeria’s oil divestments offer a unique opportunity to reshape the future of the country’s energy sector. However, the government’s ability to seize this moment hinges on its commitment to reform and transparency. By streamlining the regulatory approval process, fostering a conducive business environment, and promoting accountability, Nigeria can attract new investments, revitalise its oil industry, and unlock the immense potential of its energy resources.

The stakes are high. The success or failure of these divestments will not only impact the nation’s economy but will also determine the fate of millions of Nigerians who rely on the oil industry for their livelihoods. It is imperative that the government prioritise the needs of its citizens and the long-term sustainability of its energy sector. By taking decisive action now, Nigeria can transform its oil industry into a driver of economic growth, social development, and environmental stewardship.