Nigerian oil and gas firms expand abroad as Western majors retreat from onshore fields

The Nigerian oil and gas sector dynamic reflects both the opportunities created by the withdrawal of international oil companies from certain Nigerian operations and the growing capacity of indigenous players to translate domestic experience into regional expansion.

What: Nigerian oil and gas companies are expanding into markets such as Angola, Tanzania, Mozambique and even the Caribbean.

Why: Indigenous companies have the capacity to compete with international majors, experts say.

What next: Nigerian firms expanding on the continent will have to fit into the political and fiscal systems in the countries they’re going to operate in.

Nigeria’s oil and gas industry is undergoing a shift as major international oil companies (IOCs) retreat from riskier onshore and shallow-water operations to focus on deep offshore developments. According to Amina Danmadami, chairperson of the Society of Petroleum Engineers (SPE) Nigeria Council, companies such as Shell (UK), Chevron (US), TotalEnergies (France) and ExxonMobil (US), which helped establish the sector, are now moving their capital and expertise further offshore, creating space for domestic players to step in.

“The Nigerian [shallow and onshore] oil sector is mature… and it can help other African countries develop their own,” she says, as quoted by The Africa Report.

The shift is part of a broader trend. Local firms, including NGX- and JSE-listed Oando and independent upstream company First Exploration & Petroleum Development (First E&P), have been acquiring assets sold by the departing Western operators and are now looking beyond Nigeria’s borders. They are expanding into markets such as Angola, Tanzania, Mozambique and even the Caribbean, building on the knowledge and financial capacity they have accumulated at home.

Danmadami says the expansion of Nigerian firms to other African countries is “a win-win” for both parties. “There will be an exchange of both resources in terms of human capital, technology and finances. I think Africa needs to come together as a continent to grow.”

The Nigerian oil and gas sector dynamic reflects both the opportunities created by the withdrawal of IOCs from certain Nigerian operations and the growing capacity of indigenous players to translate domestic experience into regional expansion.

“The companies have captured enough of the knowledge and environment in Nigeria and have made sufficient profits to expand into the rest of Africa,” Chikezie Nwosu, group chief executive officer of HSEI Energies, told The Africa Report. HSEI Energies is a fully integrated Nigerian energy company active in oil and gas production, processing, transport, storage, and supply across local, West African, and global markets. Nwosu spent over 30 years in the oil sector working for indigenous and international firms.

According to Nwosu, Nigerian firms expanding on the continent will have to fit into the political and fiscal systems in the countries they’re going to operate in. “But once Africa starts looking at these indigenous companies as being able to match what the IOCs are doing, we will take over the whole landscape.”

No limits to growth

On July 18, First E&P signed a memorandum of understanding (MoU) with Tanzania’s state-owned petroleum company (TPDC) to assess and potentially develop the Mnazi Bay North Block, a natural gas asset in southern Tanzania. First E&P is part of a Nigerian-led consortium Renaissance Africa Energy, which last year bought Shell’s Nigerian unit - Shell Petroleum Development Company of Nigeria Limited (SPDC) - for about $2.8bn.

Recent regional developments include one of the largest Nigerian producers Aiteo and Mozambique’s state oil company Petromoc agreeing to build a 240,000-barrels per day (bpd) refinery, and Oando gaining operatorship of Angola’s KON 13 block while also bidding for Trinidad and Tobago’s Guaracara refinery.

Other Nigerian independents are also venturing across borders, with Walcot securing three blocks in Angola, Oceangate partnering to develop reserves in Grenada, and FA Oil winning rights to six offshore blocks in Sierra Leone.

According to Joseph Nwakwue, an energy expert and partner at the Lagos-based Zera Advisory & Consulting, Nigerian oil and gas companies have built significant capacity over time to carry out large-scale transactions.

“What is really happening is that having conquered this space, they would like to expand. There’s a limit to how far they can grow if they remain local. To grow beyond where they are now, they have to venture out, and Africa represents an opportunity for them,” Nwakwue was cited by The Africa Report as saying.

Nwakwue said that several Nigerian oil service companies were operating in countries such as Ghana, Angola, and Senegal, and noted that the African Petroleum Producers’ Organization (APPO) was working to develop a robust African oil and gas industry.

“It’s great that Nigeria is providing that lead and hopefully we will be able to build on it and ensure energy security for Africa,” he said, pointing out that the African Continental Free Trade Area (AfCFTA) was helping to lower obstacles to the movement of people, capital, and expertise between countries.

Role of IOCs in Africa

According to the African Energy Chamber (AEC), international oil and gas majors will continue to remain influential in Africa’s energy sector for the foreseeable future. The AEC’s State of African Energy 2025 Outlook Report notes that global oil and gas companies play a pivotal role in shaping the continent’s energy landscape, with all major discoveries credited to them.

“Africa’s vast and untapped resources have led to significant discoveries over the years, but unlocking these resources requires substantial investment and cutting-edge technology – both of which the majors are uniquely positioned to provide,” the report says.

As Africa emerges as a key frontier for energy exploration and production, IOCs such as Chevron, TotalEnergies, and British energy giant BP remain heavily involved in oil and gas activities across the continent.

According to S&P Global, Africa in 2024 accounted for 35% of global discovered hydrocarbon volumes, up from just 7% in 2023, with Namibia’s Mopane 1X discovery by Portugal’s Galp Energia being the largest worldwide. Other countries drawing significant attention from oil majors include Cote d’Ivoire, Angola, Algeria, Senegal, Equatorial Guinea, and the Republic of the Congo, The Africa Report said in its August 13 publication.

Competition with majors

Wumi Iledare, a former president of the International Association of Energy Economics, believes that Nigerian firms have the capacity to compete with international majors. Iledare insists that their push beyond Nigeria is “long overdue.” He points out that many founders of companies such as First E&P, Renaissance, Amni, Energia, Aradel and Sahara have been senior executives at IOCs before starting their own ventures.

“They know the name of the game as they have worked in the oil and gas industry internationally. I’m not worried about whether they can compete [but] funding may be a little bit difficult,” he said, as cited by The Africa Report.

Iledare compared many of these firms to Occidental Petroleum in the United States, observing that while they might not be vertically integrated, they were capable of carrying out upstream operations anywhere in the world.

According to Lagos-based oil and gas expert Bala Zakka, the ability of Nigerian independents to compete with international oil companies would largely depend on where their financing came from and how stable those funding environments were. He emphasised that everything ultimately hinged on the sources of capital and the level of stability in the countries providing it.