Divestment Dynamics in Nigeria's Oil and Gas Sector: Empowering Indigenous Operators in the Oil and Gas Market
Damilola Aishat Alada
Abstract
The Nigerian oil and gas sector is experiencing unprecedented transformation as international oil companies (IOCs) increasingly divest from onshore and shallow water assets, creating substantial opportunities for indigenous operators. This study examines the complex dynamics driving this divestment trend and analyzes how domestic oil companies (DOCs) are positioning themselves to capitalize on these opportunities. Through comprehensive analysis of policy frameworks, particularly the Petroleum Industry Act of 2021, local content development initiatives, and emerging market structures, this research demonstrates how divestment is reshaping Nigeria's energy landscape. The findings reveal that while divestment presents significant challenges related to technical capacity, financing, and environmental stewardship, it also offers unprecedented opportunities for indigenous participation, local value creation, and sustainable energy sector development. The research contributes to understanding how developing nations can leverage global energy transitions to strengthen domestic capabilities and achieve greater energy sovereignty.
Keywords
divestment
indigenous operators
Nigeria oil and gas
local content
domestic oil
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cost estimate for onshore crude oil fields in Nigeria. Journal of Environmental
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Opportunities for indigenous producers. Energy Intelligence Report, March Issue.
local value creation in Nigeria's oil industry: A structural equation modeling (SEM)
approach. Resources Policy, 49, 61-73.
Adewuyi, O., Kiptoo, M., Afolayan, A., Theophilus, A., Adewuyi, O., & Senjyu, T. (2020).
Challenges and prospects of Nigeria's sustainable energy transition with lessons from other
countries'
experiences.
Energy
Reports,
6,
993-1009.
https://doi.org/10.1016/j.egyr.2020.04.022
Agheyisi, J. E. (2023). The framing of the informal oil economy in Nigeria: Toward epistemic
justice of the illegal artisanal oil refineries in the Niger Delta. Humanities and Social
Sciences Communications, 10(1), 1-15.
Akinlawon, A. J., & Ildeare, O. O. (2018). Indigenous participation in E&P sector for production
capacity expansion and investment enhancement: Lessons from Nigeria. Paper SPE-
193445-MS presented at the SPE Nigeria Annual International Conference and Exhibition,
Lagos, Nigeria.
Akpan, M. J. D. (2021). Petroleum Industry Act in Nigeria: An analysis of the impact of the novel
host communities development trusts provision. Global Journal of Politics and Law
Research, 9(7), 30-46.
Danmadami, A., Iyalla, I., Oluyemi, G., & Jesse, A. (2021). Challenges of developing marginal
fields in the current climate of oil and gas industry. Paper SPE-207207-MS presented at
the SPE Nigeria Annual International Conference and Exhibition, Lagos, Nigeria.
https://doi.org/10.2118/207207-MS
Ekeinde, E. B., Dosunmu, A., & Okujagu, D. C. (2022). Economic advantages of emerging
indigenous participation in exploration and production operations in the oil and gas
industry. Paper SPE-211930-MS presented at the SPE Nigeria Annual International
Conference and Exhibition, Lagos, Nigeria. https://doi.org/10.2118/211930-MS
Emediegwu, L., & Okeke, A. (2017). Dependence on oil: What do statistics from Nigeria show?
Journal of Economics and Applied Research, 2(1), 110-123.
Etokudoh, E. P., Boolaky, M., & Gungaphul, M. (2017). Third party logistics outsourcing: An
exploratory study of the oil and gas industry in Nigeria. Sage Open, 7(4), 1-15.
https://doi.org/10.1177/2158244017735566
Eyo, E. O. (2023). Divestment from Nigerian oil is damaging the local environment. Africa at LSE
Blog. London School of Economics and Political Science.
Ilori, O. (2023). Oil and gas divestments under Nigeria's Petroleum Industry Act 2021. Available
at SSRN. http://dx.doi.org/10.2139/ssrn.5191060
Inyang, I. B., & Agbaje, W. B. (2023). Analysing the impact of oil and gas local content laws on
engineering development and the GDP of Nigeria. Resources Policy, 80, 1-12.
Mbachu, D. (2023). New dichotomy in Nigeria's oil industry as majors take to offshore. African
Business Magazine, September Issue.
Nwuke, K. (2022). Nigeria's Petroleum Industry Act: Addressing old problems, creating new ones.
Brookings Institution Policy Paper.
Nwankwo, C., & Iyeke, B. N. (2022). Risk assessment in oil and gas construction projects: A
Nigerian perspective. Engineering Management Journal, 34(2), 145-162.
Odutola, T. O., & Igwe, J. (2023). Creating a sustainable energy sector in Nigeria post-IOC
divestment: The role of academia, domestic oil companies (DOCs), and the government.
In E. O. Nwaichi, T. I. Egbe, & A. Halilu (Eds.), Triple Helix Nigeria SciBiz Annual
Conference 2023 (pp. 301-318). Springer. https://doi.org/10.1007/978-3-031-81619-2_16
Ogunbanjo, A., Fapohunda, O., Osinachi-Nwandem, S., & Ajisafe, E. (2023). Navigating
divestment in Nigeria's oil and gas sector: Regulatory framework, implications, and future
prospects. Mondaq Legal Insight.
Okotie, S., Okon, A. N., Odudu, M. D., & Isehunwa, S. O. (2018). Environmental regulation of
the oil and gas industry in Nigeria. Journal of Environmental Studies, 15(3), 78-92.
Onwuka, U., Schaefer, T., & Roman, J. (2021). Strategies for improving local content development
in Nigeria oil and gas industry. African Journal of Business Management, 15(11), 309-317.
Rawat, P., Kumar, S., & Singh, D. (2021). Construction project performance in oil and gas sector:
A comprehensive risk assessment framework. International Journal of Construction
Management, 21(8), 789-803.
Strambo, C., Gass, P., & Kraan, J. (2023). Oil and gas production narratives in Colombia and
Nigeria after the Paris Agreement. Stockholm Environment Institute Policy Brief.
Udeagbara, S. G., Okorodudu, E. A., Isehunwa, S. O., Oyebode, O. J., & Adeyi, A. A. (2023).
Treatment of produced water from Niger Delta oilfields using chemically modified sponge
gourd (Luffa cylindrica). Journal of Petroleum and Gas Engineering, 17(1), 45-58.
Vincent, M. O., & Okowa, E. (2022). Divestment in fossil fuel in Nigeria: The need for a U-turn.
International Journal of Social Sciences and Management Research, 8(3), 112-128.
West, J., & Atkins, R. (2017). From declared asset retirement obligations to a decommissioning
cost estimate for onshore crude oil fields in Nigeria. Journal of Environmental
Management, 202, 416-426.
Wood Mackenzie Research. (2023). Navigating Nigeria's changing oil and gas landscape:
Opportunities for indigenous producers. Energy Intelligence Report, March Issue.
