Expert warns Nigeria’s oil wealth risks becoming stranded
Lagos, April 2026 (TBL Africa) An energy economist, Prof. Wumi Iledare, has called for a fundamental shift in Nigeria’s petroleum strategy, warning that the country’s substantial hydrocarbon reserves may deliver little economic value without corresponding growth in production and investment.
Iledare, Professor Emeritus of Petroleum Economics at Louisiana State University, made the remarks in an interview on Friday in Lagos.
The Chief Executive of the National Upstream Petroleum Regulatory Commission (NUPRC), Mrs. Oritsemeyiwa Eyesan, on April 1 stated that Nigeria’s crude oil reserves declined to 37.01 billion barrels, with 215.19 trillion cubic feet of gas as of January 1, 2025, from 37.28 billion barrels recorded on January 1, 2026.
Iledare described Nigeria’s reported reserves as “undeniably substantial” but warned that behind these headline figures lies a structural concern: reserve growth without matching production growth delivers little economic value.
“The real test of sustainability is no longer the volume of reserves added, but the quality—specifically, how much can be commercially recovered and financed as proven assets.
In a decarbonising global economy where investment capital is increasingly selective, not all reserves are equal.
Projects must now compete on cost efficiency, carbon intensity, and fiscal attractiveness,” he said.
He added that reserves failing to meet these thresholds risk becoming stranded—technically viable, but economically unviable
“Sustainability is shifting away from geological abundance toward the creation of investment-grade reserves—assets capable of attracting capital despite tightening Environmental, Social, and Governance (ESG) standards and uncertainties of the energy transition.
Reserves growth without commensurate production growth is economically sterile,” Iledare emphasised.
He stressed that Nigeria’s reserves strategy must focus on commercially viable, financeable proven reserves.
In an era of global decarbonisation and increasingly selective capital flows, only reserves competitive in cost, carbon intensity, and fiscal terms will attract funding.
“Reserves that cannot compete risk becoming stranded assets. Sustainability today is not about geological abundance, but about converting resources into bankable opportunities under evolving ESG constraints.”
Iledare further highlighted the need for Nigeria to move from a resource control mindset to one centred on value creation, noting that production growth relies more on investor confidence than resource size.
He acknowledged that the Petroleum Industry Act (PIA) marked progress in reforming the sector’s fiscal framework but urged continuous refinement, particularly in cost recovery limits, contract stability, and fiscal clarity.
“Capital does not respond to reserves; it responds to risk-adjusted returns.
“Reducing regulatory delays, improving transparency, and addressing infrastructure bottlenecks are critical to unlocking growth,” he said.
On gas development, Iledare described Nigeria’s position as paradoxical, with vast resources coexisting alongside persistent energy poverty and limited industrialisation.
He attributed this to the historical treatment of gas as a by-product rather than a central pillar of economic development.
“To unlock value, gas must be repositioned as a domestic economic catalyst.”
He advocated for stronger focus on gas-to-power reliability and the expansion of gas-based industries, including fertiliser, petrochemicals, and methanol.
He also cautioned against letting export ambitions, such as liquefied natural gas expansion and pipeline projects, overshadow domestic utilisation priorities.
Highlighting pricing as a critical factor, Iledare said gas must be priced to balance affordability with commercial viability, warning that failure to achieve this would constrain both domestic demand and upstream investment.
Regarding regulatory reforms, he acknowledged NUPRC’s visible efforts to become more responsive and commercially oriented, citing licensing rounds and digitalisation initiatives.
However, he stressed that investor confidence depends on consistent execution rather than policy statements.
“The real test is whether regulatory actions reduce approval timelines, ensure transparency, and enforce rules predictably. Credibility in this sector is cumulative,” he said.
Addressing the global energy transition, Iledare argued that Nigeria’s challenge is not a trade-off between hydrocarbons and climate commitments but a matter of sequencing.
He maintained that continued exploitation of hydrocarbons, particularly gas, remains essential for development, but must be pursued with greater efficiency and lower emissions.
He called for reduced gas flaring, improved carbon management, and strategic reinvestment of hydrocarbon revenues into energy diversification and broader economic development.
“Nigeria’s transition must be pragmatic, anchored on energy security, economic inclusion, and environmental responsibility—not ideology,” he said.
In conclusion, Iledare emphasised that Nigeria’s petroleum future will be shaped not by the size of its reserves, but by the quality of its policy decisions.
“The transition era does not eliminate opportunity, but it significantly narrows the margin for inefficiency. What Nigeria needs now is disciplined alignment between reserves, investment frameworks, regulatory credibility, and a coherent energy transition strategy,” he added.
