Asset sales open new window for local oil, gas players

Nigeria’s oil and gas industry is bracing for another wave of asset sales. At least 10 onshore and shallow-water oil blocks, holding an estimated two billion barrels of oil equivalent, are set to come up for potential divestment, according to findings by BusinessDay.

Data sourced from a new report by Renaissance Capital Africa show that International Oil Companies (IOCs) and the Nigerian National Petroleum Company Limited (NNPC) are preparing to offload mature onshore and swamp assets as they double down on offshore and deepwater operations.

“Looking ahead, we anticipate further divestments by IOCs and NNPC JVs, where we see a significant opportunity for local E&P players to acquire 10 oil wells holding 2,008 mmboe,” Renaissance Capital said, citing data from industry engagements.

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The potential assets include blocks operated by Chevron, TotalEnergies, and NNPC’s exploration subsidiary NEPL, spread across the Niger Delta’s prolific terrain.

These include OMLs 49, 50, 51, 55, 64/66, 65, 86/88, 100, 118 (Agbara), and 140. Together, they contain 937 million barrels of oil reserves and 6.4 trillion cubic feet of gas.

Indigenous players poised to dominate

Analysts say the coming divestments mark the third major phase of ownership change in Nigeria’s oil industry, following a decade of piecemeal IOC exits that transferred billions of dollars in assets to local firms such as Aradel Holdings, Seplat Energy, Heirs Holdings, and ND Western.

“Indigenous and regionally focused E&Ps have made acquisitions worth over USD7bn in Nigeria alone since 2020,” the report entitled ‘Nigeria Oil & Gas: Recovery on the Horizon,’ noted. “Post the acquisition of these onshore assets, local vandalism and theft have reduced materially.”

Renaissance Capital said that after decades of underinvestment, the shift to local ownership is helping to unlock new capital and operational flexibility.

“ARADEL, SEPLAT, Heirs, ND Western, and others are deploying fresh capital into drilling, well re-entries, and field development programmes that could expand their scale,” it said.

The moves are expected to consolidate Nigeria’s transition to a ‘locally dominated’ onshore oil sector, while IOCs focus on lower-risk, capital-intensive deepwater assets. Offshore and deep offshore operations accounted for 55 percent of national production in 2024, compared with 45 percent from land and swamp terrains.

Why IOCs are exiting

According to Renaissance, the reasons behind the exodus are clear: “ESG considerations, a pre-determined investment lifecycle, and a tough operating environment.”

“Many IOCs have committed to the World Bank’s Zero Routine Flaring Initiative and reporting requirements from the Securities and Exchange Commission,” it said. “Mature O&G assets are no longer reliant on foreign investment and technical capabilities.”

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Security concerns have also weighed heavily. “Transmission losses from production stations to terminals were porous with up to 90% losses, at its peak FY20–24,” the report said, referring to rampant oil theft that has plagued the Niger Delta.

Another factor is policy clarity.nThe Petroleum Industry Act (PIA) of 2021 finally gave investors ‘free entry and exit,’ replacing the bureaucracy that once delayed asset transfers.

“Better regulations (PIA, 2021) enabled the entry and exit of investors in the upstream business,” the report said.

Many of the recent transactions, including the $2.4 billion sale of Shell Petroleum Development Company (SPDC) to the Renaissance Energy Group and Seplat’s $1.58 billion acquisition of Mobil Producing Nigeria Unlimited, were structured as leveraged buyouts.

“The oil produced is security for the loan issued to the buyer by the seller, then paid down as crude is delivered to the seller,” Renaissance said.

Ten new divestment targets

Among the 10 divestment candidates listed by the firm, some are wholly owned by NNPC subsidiaries and others are jointly operated with Chevron and TotalEnergies.

They include: OML 65 (COPDC) – 85 mmboe oil reserves; OML 50 (NEPL) – 208 mmboe oil, 1,085 bcf gas; OML 86/88 (NEPL) – 204 mmboe oil, 3,838 bcf gas; OML 118 (Agbara, Sigmund) – 3 mmboe oil, 189 bcf gas; OML 51 (Yorla South, Chevron/NEPL) – 1 mmboe oil; OML 140 (Chevron) – 110 mmboe oil; OML 64/66 (NEPL) – 55 mmboe oil, 390 bcf gas; OML 49 (Chevron/NEPL) – 69 mmboe oil, 93 bcf gas; OML 55 (Belemaoil) – 40 mmboe oil, 580 bcf gas; OML 100 (TotalEnergies) – 162 mmboe oil

Together, these blocks represent what Renaissance calls a “credible pipeline for the next phase of local M&A.”

The company said they offer “bankable projects for investors and local commercial banks,” with indigenous players now able to tap local funding sources rather than rely solely on offshore lenders.

“O&G-specific assets account for approximately 30% of the loan book for local commercial banks,” it said. “This can grow in the aftermath of IOC divestments to indigenous E&Ps, in our view.”

Funding the next wave

Financing capacity has long been a constraint for Nigerian independents, but Renaissance said the new phase of transactions will benefit from refined funding structures and improved governance.

“Funding considerations have been refined since the first cycle of IOC divestments given the spike in sector NPLs historically,” it said. “Enhanced due diligence now includes ESG action plans, proof of reputable off-takers, and monthly production reports to inform repayment capacity.”

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The report cited Oando’s $375 million reserve-based lending facility from Afreximbank as an example of how structured finance is evolving to support local operators.

The NNPC, transformed into a commercial entity under the PIA, is also expected to rationalise its portfolio ahead of a potential initial public offering. “The medium-term focus will be on asset rationalisation and governance in the run-up to a potential IPO,” Renaissance said, adding that the company has “begun by securing funding for growth” and clearing long-standing cash call arrears to its joint venture partners.

The PIA has also empowered regulators to streamline approvals and attract investment. The Reduction of Petroleum Sector Contracting Cycle (RPSCC) directive, for instance, cut approval times for oilfield development plans to 30–45 days.

“This enables faster O&G project execution to meet medium-term crude and gas production targets,” Renaissance said.

Production recovery on track

Nigeria’s oil production is gradually recovering from years of decline, the report noted. “Active rig counts have climbed from 29 in January 2024 to 40 in September 2025, a level not seen in several years,” it said. “If maintained, this upward trend in drilling activity provides a credible pathway for Nigeria to not only meet but potentially exceed medium-term production targets.”

The government aims to raise production above two million barrels per day by fiscal year 2026, supported by the PIA’s incentives and rising domestic participation.

“The building blocks for growth are being put in place,” the report said. “If maintained, Nigeria could not only meet but potentially exceed medium-term production targets, reinforcing the narrative of a recovering and investable oil and gas sector.”

Midstream transformation: Dangote and DCSO

Midstream developments are also reshaping the sector. The 650,000-bpd Dangote Refinery is “a structural inflection point,” Renaissance said, with the Domestic Crude Supply Obligation (DCSO) ensuring a steady supply of local crude.

“The simple rule of ‘no compliance, no exports’ turns DCSO into more than a policy aspiration; it becomes an operational requirement,” the firm said. “By replacing imports with local output, DCSO reduces FX outflows, helps stabilise the Naira, and smooths inflationary pressures.”

The refinery is expected to improve Nigeria’s current account by $5.5 billion annually by keeping value-added onshore, according to IMF estimates cited in the report.

Gas transition and long-term outlook

The report also highlights Nigeria’s massive untapped gas potential. With 193.3 trillion cubic feet of proven reserves, the country ranks among the world’s top 10 in reserves but still lags in production. “Nigeria sits among the highest gas-reserve countries in the world but is not among the leading gas producers,” it said.

Projects like the Ajaokuta–Kaduna–Kano (AKK) gas pipeline, now 84 percent complete, and NLNG’s Train 7 expansion, are central to Nigeria’s ‘Decade of Gas’ industrialisation plan. “The AKK pipeline will be an enabler for domestic industrialisation and gas-to-power projects in Abuja, Kaduna and Kano,” the report said.

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Cautious optimism

Despite challenges, Renaissance said the outlook is ‘broadly positive,’ supported by reforms and rising investment momentum. “The ongoing divestment of onshore and shallow-water assets by IOCs to indigenous players is reshaping the upstream landscape,” it concluded. “Sustained execution on these fronts could position Nigeria’s petroleum industry for a gradual but durable recovery in both output and value creation.”