Industry experts call for stronger governance in oil sector
By Yunus Yusuf
Nigeria’s oil and gas future will be shaped less by the size of its hydrocarbon reserves and more by the strength of its governance institutions, leading energy experts have warned.
They raised fresh concerns about policy discipline, regulatory credibility and execution failures in Africa’s largest energy producer.
The experts in a separate interviews said that despite Nigeria’s vast petroleum endowment, weak institutional guardrails, regulatory uncertainty and inconsistent policy implementation continue to undermine the sector’s long-term value and investor confidence.
Their assessments formed part of projections for the energy industry in 2026—a year widely seen as pivotal for determining whether recent reforms will translate into sustainable growth.
Prof. Wumi Iledare, Professor Emeritus of Petroleum Economics at Louisiana State University, said the decisive factors for Nigeria’s oil and gas industry in 2026 would be governance quality and regulatory discipline and not geology.
“Nigeria remains richly endowed with petroleum resources, but sustainable value creation depends on faithful implementation of the Petroleum Industry Act (PIA), regulatory neutrality and credible sector leadership,” Iledare said.
According to him, the sector does not need new laws or ad-hoc interventions, but consistent enforcement of existing ones.
“What the industry needs in 2026 is predictable regulation, institutional restraint and strict adherence to the PIA,” he said.
Iledare who is also the Executive Director, Emmanuel Egbogah Foundation identified the absence of fully constituted governing boards for petroleum regulatory institutions as a critical governance gap.
“The PIA deliberately created boards for both the Upstream Commission and the Petroleum Authority as institutional guardrails.
“These boards are not decorative; they are essential for accountability, strategic oversight and protection against regulatory capture,” he said.
Without them, he warned, regulators risk becoming overly personalised and vulnerable to political and commercial pressures.
On upstream operations, Iledare called for urgent measures to arrest declining production, including improved asset security, faster project approvals and transparent fiscal administration.
He said ongoing asset divestments by international oil companies must be carefully supervised to ensure technical competence, financial resilience and environmental responsibility.
In the downstream sector, he argued that Nigeria is undergoing a structural market transition rather than experiencing market failure.
He noted that regulators must enforce competition rules and ensure neutrality among dominant players in an increasingly oligopolistic market.
On refining, Iledare urged government to withdraw from direct operations and focus instead on creating a stable commercial environment.
“Refining is a business, not a sovereign obligation.
“Local refining will only thrive if private investors operate on a level playing field, free from policy reversals or preferential treatment for imports,” he said.
He cautioned that the commercialisation of the Nigerian National Petroleum Company Limited (NNPC Ltd.) under the PIA would remain incomplete if balance-sheet discipline was replaced by recurrent fiscal bailouts.
“Commercialisation is not the absence of government, but the presence of rules. Institutions—not improvisation—must guide the sector in 2026,” he said.
Iledare concluded that Nigeria’s energy future lies in governing hydrocarbons better, not merely producing more of them.
Dr Ayodele Oni, Partner and Chair of the Energy and Natural Resources Practice Group at Bloomfield Law Practice, said 2026 should be a year of policy stability and effective implementation.
While acknowledging that multiple reforms have been introduced to attract investment, Oni said the real test lies in translating frameworks into measurable outcomes.
He said crude oil production could rise toward the Nigerian Upstream Petroleum Regulatory Commission’s target of 2.5 million barrels per day, from current levels of about 1.7–1.83 million bpd, but only with careful coordination across regulatory, operational and security fronts.
Oni also projected continued indigenisation of the sector, following the divestment of onshore and shallow-water assets by international oil companies such as Shell, ExxonMobil, Eni and Chevron.
“Indigenous producers now carry the full responsibility of sustaining production growth,” he said,
He added that government support through financing frameworks, timely approvals and tailored fiscal incentives would be critical to maintaining momentum.
On downstream operations, Oni said 2026 could see modest progress in domestic refining, driven by the Dangote Refinery and modular plants, but warned that success hinges on strict enforcement of Domestic Crude Supply Obligations and effective regulation.
“Without this, imports will continue to undermine local refining and discourage new investment,” he said.
He also projected accelerated adoption of cleaner fuels—particularly compressed natural gas (CNG), liquefied natural gas (LNG) and liquefied petroleum gas (LPG)—with the Presidential CNG Initiative expected to gain traction in 2026.
On security, Oni said pipeline vandalism and crude theft had cost Nigeria hundreds of thousands of barrels per day in lost capacity, noting that over $2 billion would be required to rehabilitate damaged infrastructure.
He urged operators to take environmental, social and governance (ESG) obligations more seriously to avoid legacy issues that have fueled community unrest.
Oni further argued that Nigeria must decisively reduce fuel imports, warning that inadequate crude supply to domestic refineries—such as disputes witnessed in 2025—undermines the logic of local refining.
“Producing refined products locally without functional pipelines and depots risks replicating old inefficiencies in a new system,” he said.
Responding to governance concerns, Mr Andy Odeh, Chief Corporate Communications Officer of NNPC Ltd., said the company operates under a best-practice governance framework established by the PIA 2021.
“Our processes are designed for transparency and accountability,” Odeh said, citing competitive procurement through the SAP-Ariba platform, board-level oversight of major contracts and commercial, arm’s-length crude oil allocation.
He said the company had eliminated legacy joint-venture cash call arrears through pre-funded budgets and incorporated joint ventures, while its financial statements are audited by internationally recognised firms and overseen by statutory institutions.
On public accountability, Odeh said NNPC Ltd. maintains a cooperative relationship with the National Assembly and is committed to reconciling all records in line with legislative and regulatory requirements.
He reaffirmed the company’s zero-tolerance stance on financial impropriety, noting that allegations trigger internal and external forensic reviews under a “three lines of defence” control system.
On refineries, Odeh said a comprehensive review of NNPC’s four refineries is underway, with plans to disclose technical and equity partners by mid-2025 to repurpose or upgrade the facilities on a commercial basis.
“NNPC Limited remains steadfast in its mission to be a transparent, commercially driven energy company that serves the interests of all Nigerians,” he said.
Analysts agree that Nigeria stands at a crossroads: whether to entrench institutional discipline or revert to discretionary governance.
As experts repeatedly stressed, the country’s challenge is no longer about finding oil, but about managing it wisely—using hydrocarbons to stabilise public finances, strengthen the currency and support long-term economic resilience.
As one expert put it, Nigeria’s future prosperity depends not on producing more barrels, but on governing them better.
