Nigeria’s Oil Industry: More Companies, Fewer Barrels
Nigeria has been celebrating a remarkable transformation in its oil and gas company register with the number of upstream operators rising from less than 10 in 2010 to 117 today, while local content jumped from less than 5 per cent to the current 61 per cent. But this growth has not impacted the country’s oil production numbers as decline and stagnation still persist, Peter Uzoho writes.
At a recent summit in Lagos, the Nigerian Content Development and Monitoring Board (NCDMB) revealed to industry stakeholders that the country now has 117 operating companies in the upstream sector of the country’s oil and gas industry, up from fewer than 10 in 2010.
The agency also disclosed that Service companies have surged to 11,764 and that Local content, which was less than five per cent in 2010, now stands at 61 per cent as of 2025.
Acting Manager, Midstream Monitoring at NCDMB, Mr. Patrick June, who reeled out the figures, credited the success to the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010, meaning that by all accounts, the Act has achieved its core mandate: putting Nigerians at the center of the value chain.
To the NCDMB, the numbers tell a success story: the 117 operating companies have created 11,934 direct jobs, while 11,764 service firms account for 129,240 jobs.
NCDMB’s database now captures hundreds of firms registered under the Joint Qualification System, 50 fabrication yards, 20 engineering design firms, and 122 manufacturing companies.
“Nigerian companies in the upstream sector, which were dominated by international and now national companies, were just less than 10. But as we speak, operating companies are about 117,” June said. “So, that is a significant improvement.”
Yet, while Nigeria celebrates the growth of its oil and gas company register, it has also been watching its production numbers decline or stagnate for nearly two decades. Current production hovers between 1.4 million and 1.7 million barrels per day including condensate, according to the recent monthly oil production report released by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for May 2026. That is a far cry from 2005 and 2010, when fewer than 10 companies dominated the upstream and Nigeria produced 2.5 million bpd and 2.6 million bpd, respectively.
So, with more companies and fewer barrels, is Nigeria really making progress worth celebrating? The answer lies in the difference between licenses and capacity.
More Operators, less oil
The paradox that NCDMB’s data cannot hide is simple: while the number of license holders has multiplied by more than 10, Nigeria’s crude oil output has stagnated and even declined. NUPRC data shows output averaged 1.70mbpd in May 2026, up from 1.48mbpd in February. That rebound is real, driven by pipeline security and reactivation of dormant wells. But it remains far below Nigeria’s Organisation of Petroleum Exporting Countries (OPEC) quota of 2.5mbpd and the 2.6mbpd achieved in 2010 when Shell, ExxonMobil, Chevron, TotalEnergies, ENI and NNPC called the shots.
Today, the 117 operators include five international oil companies (IOCs) –(Shell Nigeria Exploration and Production Company Limited (SNRPCo), Nigerian Agip Exploration Limited, Chevron Nigeria Limited, TotalEnergies EP Nigeria Limited and Esso Exploration and Production Nigeria Limited), over 100 Nigerian and international independent firms as well as marginal field operators.
NCDMB’s 61 per cent local content figure measures Nigerian participation, not Nigerian production efficiency.
Licensing Rounds Without Execution
This gap is magnified by Nigeria’s aggressive licensing strategy. NUPRC has conducted about four licensing rounds in the last five years, where oil blocks and marginal fields were given to a lot of companies, largely indigenous firms, but only few of those awardees have been able to make significant progress in optimising those resources.
The rounds were meant to deepen Nigerian participation and replace divesting IOCs. They succeeded in adding names to the operator register. But many awardees lacked the capital, technical expertise, and security capacity to move from signature bonus payment to first oil. A marginal field award is not a producing asset until wells are drilled, flowlines built, and export routes secured. For many of the new entrants, those steps stalled at the planning stage.
The result is a register filled with “license holders” rather than producers. While NCDMB celebrates 117 operating companies, NUPRC is racing to reactivate about 3,000 dormant wells – many of them sitting on blocks awarded in recent rounds. The licensing process democratized access, but it did not create the conditions for execution.
From Access to Capacity
There is no denying that the NOGICD Act of 2010 succeeded at its primary objective. It democratized access. Divestments by IOCs transferred onshore and shallow-water assets to indigenous firms. Marginal field rounds created space for new entrants. NCDMB’s push forced operators to patronize Nigerian fabrication yards, engineering firms, and service companies. That explains the jump to 117 operators and 11,764 service firms.
Nigerian firms moved from the margins to the center of the value chain. Fabrication yards that barely existed in 2010 now execute complex modules. Engineering design firms that once handled minor scopes now design platforms. Manufacturing companies supply pipes, valves, and fittings. The jobs created – 11,934 by operators and 129,240 by service firms – are real and economically significant.
But upstream oil is not a numbers game. It is a capital, technology, and security game. Many of the new 107 operators inherited aging fields with high decline rates, deferred maintenance, and huge decommissioning liabilities. They did not inherit the IOCs’ balance sheets, deep technical benches, or global procurement networks. A fabrication yard and engineering design firm are critical for local content, but they cannot replace the $30 million needed to drill and complete a new well. Banks remain wary of lending to small Exploration and Production (E&P) firms after years of price volatility and security risks.
The $30bn Capital Gap
Executive Chairman of AA Holdings, Mr. Austin Avuru, has been one of the most consistent voices on this point. Sometime in 2022, he suggested that to reverse the trend of decline and play catch-up, the Nigerian oil and gas industry needed to raise capital spending to close to $30 billion annually over the next 10 years.
Avuru argued that the oil production decline started around 2012 when the six big IOCs – Shell, ConocoPhillips, TotalEnergies, ExxonMobil, Chevron and Eni – began contemplating divestment from Nigeria.
“That led to a 70 per cent year-on-year drop in capital spending,” he said. “It went down from the $20 billion average spending year-on-year over a decade ago to the current $6 billion annually. As a result of this drop in spending, oil production correspondingly plummeted from a high of 2.6 million barrels per day in the last 20 to 30 years to now one million barrels.”
According to him, year-on-year, Nigeria recorded a 70 per cent reduction in spending to a point where it went from an average of $20 billion a year to $6 billion a year. “That corresponds to the production drop I showed you. And we have to reverse this $6 billion spend, and to play catch-up, we will not be doing $20 billion a year. We will be doing something closer to $30 billion a year over the next 10 years to play catch-up”, he stated at the time.
Avuru traced the production decline directly to the date the “big spenders” decided to leave. “When they don’t spend, that’s what you see,” he said.
He warned that the transition from IOCs to independents was a critical industry moment that should have been managed by a forward-looking regulator asking: “While these people are leaving, who is coming in? What is the process?”
Theft and Shut-in Wells
Industry experts believe security and theft compounded the capital problem, arguing that as the number of operators grew after 2012, pipeline vandalism and crude theft exploded.
The IOCs had the resources to absorb losses, deploy private security, and maintain export terminals but many new independents did not, resulting to fields been shut-in because evacuation was impossible.
NUPRC is now racing to reactivate about 3,000 dormant wells under its “Project One Million Barrels” initiative. But those wells were shut largely because small operators lacked the muscle to protect infrastructure and fund workovers.
The 117 operating companies include many “license holders” whose assets exist more on paper than in production. A well that cannot evacuate oil is not a producing well, no matter who holds the license.
NUPRC’s recent reforms show the regulator understands the gap. By cutting reactivation permit time from 2-6 weeks to 2-4 hours, and by approving 37 new evacuation routes, the commission is targeting shut-in volumes from existing assets. Production has climbed from 1.48mbpd in February 2026 to 1.70mbpd in May. But the target of 2mbpd by 2026 remains distant.
Efficiency Problem
Energy analysts say the fragmentation of assets also hurt efficiency, explaining that a field that one major could develop as a single integrated project is now split among multiple small players. Under this new arrangement, each must build its own flowline, negotiate with the same host community, and fight the same vandals, even as the duplication of overheads made marginal projects uneconomic.
Avuru captured this perfectly: “The larger the number, the smaller the production. This is how we have managed the transition. More players, less activities, less production, no business continuity thinking.”
He compared the situation to Nigeria’s banking sector, where the Central Bank stepped in to force consolidation, and the communications sector, where NCC under Ernest Ndukwe drove the GSM revolution without interference. “That’s the regulator we are looking for today,” he said.
The point is not to demonize local content. The policy gave Nigerians a seat at the table. But the next challenge is to ensure those at the table can drill, produce, and fill the nation’s quota. Having 117 operators looks democratic, but upstream oil rewards scale. Twenty to thirty well-funded, technically sound independents with access to capital and security capacity will deliver more barrels than 117 undercapitalized firms.
New Independents
The recent divestment by Shell, ExxonMobil, Eni and others from onshore terrain has strengthened the capacity of Nigerian independents. Companies like Renaissance, Seplat, Oando, Heritage, Aradel, Waltersmith and First E&P have emerged as big players. Today, Nigerian independents account for over 50 per of the country’s oil production, a massive shift from 2010.
But even with this shift, production numbers have not matched the 2005 and 2010 records, even as annual capital investment remains low at about $6 billion to $7 billion. Seplat and Heirs Energy led the 2024 reactivation drive with over 500 permits issued by NUPRC, but the volumes added are still incremental. The issue is not ownership; it is capacity.
Licensing to Capacity Building
Avuru’s call for a “competent and powerful regulator” cuts to the heart of the dilemma. He said the Nigerian oil and gas industry was in dire need of a regulator with the kind of power and authority as obtained in banking and communications. “There was a need for a competent and capable regulator that will not be cowered by any force,” he stressed.
NUPRC has begun that work under its 90-day Quick Wins agenda. It has centralized and digitized approvals, slashed permit timelines, and is pushing “Project One Million Barrels” to recover shut-in volumes. But the bigger task is managing the transition from IOCs to independents. That means sieving “the grains from the chaff,” as Avuru put it – identifying which indigenous firms have the technical and financial capacity to operate at scale, and encouraging consolidation among those that do not.
The licensing round experience reinforces this point that Issuing blocks is easy but optimizing them is hard. NUPRC must now shift focus from awarding new blocks to enforcing work programme obligations and promoting farm-outs or mergers where awardees cannot execute. Otherwise, Nigeria will keep adding license holders without adding barrels.
Similarly, NCDMB’s next phase must also shift from counting companies to building capacity as funding access is critical. Without a dedicated upstream fund or improved fiscal terms, many independents will remain license collectors.
NCDMB and the Ministry of Petroleum Resources must work with banks, development finance institutions, and NNPCL to create financing vehicles for workovers, drilling, and security infrastructure.
Quality over Quantity
Indeed, local content gave Nigerians a seat at the table. From less than 10 to 117 operating companies, from under five to 61 per cent local content, from almost no fabrication yards to 50 yards – those are real wins that transformed the industry’s structure. But participation without production leaves Nigeria with more companies and less oil.
The lesson is clear: the number of operators is not a proxy for production.
Experts believe that Nigeria does not need 117 weak operators, rather it needs strong independents capable of competing and delivering output like the IOCs. The sector must move from fragmentation to consolidation, from licensing to capacity building, from access to execution.
Until then, Nigeria will keep celebrating the growth of its oil and gas company register while watching its production numbers stagnate. The rest of the world will keep asking: with 37 billion barrels of reserves, why is Africa’s top producer struggling to fill its quota?
