Uche Cecil Izuora
Weak financing for deep offshore and onshore oil and gas projects in Nigeria may pose significant challenge to the country’s anticipated $50 billion investment targets.
According to an industry analyst, domestic financing for both deep offshore and onshore projects has weakened in recent years, with the banking sector largely reaching its limit for oil and gas exposure.
He said development finance institutions are also facing constraints, while some distress in the upstream sector has created additional pressure for lenders, which implies that the private investment model that previously helped local oil companies lift production is unlikely to be enough in the current environment.
This is the view expressed by Femi Oladein, Chief Executive Officer (CEO) of Argentte Capital Partners, in an interview with CNBC Africa.
Nigeria’s new tax incentive for deep offshore oil and gas projects could help unlock $50 billion in investment and raise output by an additional 1 million barrels per day, but capital constraints, policy uncertainty and long project lead times remain major obstacles, he said.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has said the Deep Offshore Oil and Gas Project Incentives (Tax Remission) Executive Order 2026, recently signed by President Bola Tinubu, has the potential to attract large-scale investment into the sector.
The order is part of a broader push by the government to revive upstream activity and reverse years of declining crude production.
Oladein said the administration is “extremely excited” about the fiscal policy changes, but added that the investment mobilization story still has “quite a bit of room to go” and several hurdles to clear.
“If we’re going to achieve that $50 billion number, a lot of that investment is going to come from deep offshore and it’s going to come from the international oil companies because they are the ones who are able to galvanize the type of capital that is required,” Oladein said.
Nigeria has been trying to lift crude output after years of underinvestment, infrastructure problems and oil theft. Oladein said those structural issues have contributed to the country’s production decline and would require significant fresh capital to unwind.
He noted that Nigeria’s current production stands at about 1.5 million barrels per day, while the government is targeting roughly 2 million barrels per day before year-end. That gap, he said, highlights the challenge of how quickly new supply can be brought onstream.
According to him, existing international oil companies have an advantage because they already understand Nigeria’s fiscal, operational and environmental landscape. Even so, he cautioned that oil and gas development is inherently slow, with pre-production work and reserve development often taking two years or more.
That suggests any near-term increase in production is more likely to come first from incumbents already operating in the market, rather than entirely new entrants. Still, Oladein said Nigeria would ultimately need both more spending from current players and fresh capital from new investors.
“I’d say you need a combination of both new players such as probably the Chinese and probably the Indians who are able to galvanize capital and of course players that are already in the market and have an understanding of what is required to unlock value in the short term,” he said.
On regulation, Oladein said the government had done substantial work to improve the fiscal and policy framework for investors. But he said competitiveness for global capital remains intense, and investors are likely to prioritize stable operating environments, predictable policy and confidence in long-term returns.
He said Nigeria may have an advantage because parts of its energy market are now more broadly deregulated, creating room for growth. But he warned that the sustainability of reforms would be closely scrutinized.
“We have an election that’s coming up in six months thereabouts,” Oladein said. “Everyone is going to have their eyes on that and will be careful in committing long-term investment until we know the outcome.”
The interview also turned to the government’s claim that the removal of petrol subsidies helped mobilize about 15.8 trillion naira ($9.9 billion) in resources for the federation between June 2023 and December 2025. Oladein said the figure did not appear unrealistic when compared with historical annual subsidy costs.
“So the number doesn’t look outrageous,” he said, adding that past subsidy payments had typically been in the range of $4 billion to $5 billion a year.
But he questioned whether the reported savings had improved living conditions for ordinary Nigerians. Inflation, higher taxes and a rising cost of living have weighed on households since the subsidy removal, he said, leaving many citizens unconvinced by the government’s savings narrative.
“The jury is still on the streets, and I don’t think the average Nigerian can point to subsidy removal as a positive thing that has happened to their personal wallets over the last two years,” Oladein said.
He argued that the more important question is how the savings have been used. In his view, the main beneficiaries so far have been government institutions, civil servants and creditors rather than the broader population.
“The average Nigerian hasn’t really seen any positive impact when it comes to their everyday living,” he said.
Oladein also raised concerns about the government’s continued reliance on borrowing. Referring to figures discussed during the interview, he said borrowing has become a consistent part of Nigeria’s fiscal funding structure over the past decade.
He said borrowing in itself is not necessarily a problem, but the key tests are its cost and whether the money is being deployed into productivity-enhancing sectors such as infrastructure and education. On that measure, he said, Nigeria’s borrowing record has been weak.
“The bigger issue is not about borrowing. It’s about what the borrowing has been used for, and we can all agree that it hasn’t really improved the productivity of the Nigerian economy,” Oladein said.
The new offshore tax order could still become a significant signal to global energy investors if it is backed by policy continuity, faster execution and improved operating conditions. For now, the market will be watching whether Nigeria can turn fiscal incentives into committed capital and, eventually, barrels in the ground.