For decades, Nigeria’s oil industry has been heralded as the lifeblood of the nation’s economy. Once regarded by Shell as the “jewel in the crown” of its global operations, Nigeria’s oil sector now stands on the brink of collapse. The recent wave of divestments by multinational oil giants signals more than a mere corporate shift—it heralds the onset of a catastrophic economic unravelling that Nigeria is woefully unprepared to handle.
Shell, after nearly seven decades of operations, has packed its bags, selling off its onshore assets to local operators. TotalEnergies is following suit, offloading its stake in Shell’s Nigerian subsidiary. Chevron, ExxonMobil, and others have already sold off significant assets, leaving behind a gutted industry plagued by insecurity, rampant oil theft, and dilapidated infrastructure. These corporations are fleeing a sinking ship, washing their hands of the toxic legacy they helped create, while Nigeria stumbles towards a future of declining production, rising operational costs, and shattered communities left behind in the wreckage.
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Nigeria’s oil production, once Africa’s largest, has nearly halved since its peak in 2005 and shows no signs of recovering. The Niger Delta—a region that was supposed to be the heart of Nigeria’s oil wealth—has become a war zone where militancy, vandalism, and environmental degradation are the new norm. The security costs for companies operating in the region are astronomical, exacerbated by the deterioration of ageing pipelines and facilities that leak oil and spew fumes, poisoning the very land they once enriched.
A recent BusinessDay survey underscores this grim reality: Nigeria has become one of the most expensive places in the world to produce crude oil. The combination of outdated infrastructure, bureaucratic bottlenecks, unpredictable fiscal policies, and an escalating wave of violence in the oil-producing regions has made oil extraction prohibitively expensive. The break-even price for Nigerian crude now hovers between $40 and $48 per barrel, compared to Saudi Arabia’s $8 per barrel. The contrast is glaring: Nigeria’s once golden asset is turning into a financial liability as global demand for cheap, sustainable energy rises.
The oil majors might claim they aren’t “abandoning” Nigeria, but their retreat from the Niger Delta is a full-scale exodus. Promises of maintaining offshore investments ring hollow when one considers the rising costs and regulatory challenges associated with deepwater production. Even these remaining investments are under threat from the inevitable shift towards greener energy. When that shift fully arrives, Nigeria’s oil may well become worthless, leaving the nation with nothing but an eroded economy and a devastated environment.
“Even these remaining investments are under threat from the inevitable shift towards greener energy. When that shift fully arrives, Nigeria’s oil may well become worthless, leaving the nation with nothing but an eroded economy and a devastated environment.”
Talk of diversification and Nigeria’s much-touted “Decade of Gas” initiative offers little comfort. Despite sitting on Africa’s largest reserves of natural gas, Nigeria has failed to capitalise on this resource. The OB3 gas pipeline, a keystone project for Nigeria’s energy future, remains incomplete after over a decade of delays, funding gaps, and vandalism. The government’s inability to meet its cash call obligations—over $1 billion in arrears by 2022—has further crippled its ability to attract foreign investment and complete essential projects. Meanwhile, gas flaring continues at staggering levels, with 7.5 billion cubic metres of gas wasted in 2021 alone.
The gap between Nigeria’s ambitions and its achievements is widening by the day. The “Decade of Gas” has devolved into a series of empty slogans, marred by delays, environmental destruction, and chronic mismanagement. The Nigerian National Petroleum Corporation (NNPC) is mired in debt, struggling to fund joint ventures, and unable to stem the tide of vandalism that has seen over 300 pipeline attacks between 2021 and 2022. The result is a gas industry that remains paralysed, with key projects stalled and investor confidence evaporating.
Read also: Non-oil exports rise by 6.26%, hits $2.7bn in first half of 2024
The environmental toll of Nigeria’s oil and gas dependence is equally dire. The Niger Delta is one of the most polluted regions on Earth, scarred by decades of oil spills, flaring, and neglect. The oil majors, in their rush to the exit, have left behind a wasteland of derelict pipelines and poisoned land, while the government turns a blind eye. The people of the Niger Delta, once promised prosperity, now choke on the toxic fumes of a dying industry.
Nigeria’s leaders have long been complacent, riding the wave of oil wealth while ignoring the ticking time bomb beneath their feet. Now, as the wells run dry, the country faces a terrifying reality: without a swift and radical shift in its energy policy, Nigeria risks becoming a relic of the fossil fuel age—trapped in a twilight of economic irrelevance and environmental ruin.
The world is moving away from oil. If Nigeria doesn’t act, it will be left behind, a fossil-fuel mausoleum to the promises of a once great industry. The time for rhetoric is over. Nigeria must confront its energy crisis head-on, or face an economic collapse that will reverberate for generations.
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