Renaissance Energy Warns Nigeria on IOCs’ Exit Over Shrinking Profits

Renaissance Energy has highlighted the growing trend of International Oil Companies (IOCs) divesting from Nigeria’s oil and gas sector, attributing the exodus largely to diminishing profit margins and a challenging operating environment. The firm stated that the migration of these companies underscores the need for Nigeria to improve its investment climate and address structural issues within the industry.

Speaking on the matter, Renaissance Energy executives noted that global energy firms are increasingly shifting their portfolios to regions where returns on investment are higher and operating conditions are less cumbersome. According to the company, Nigeria’s oil and gas sector has faced numerous challenges in recent years, including high operational costs, insecurity in the Niger Delta, oil theft, and policy uncertainties, all of which erode profitability for investors.

Industry analysts have observed that several major IOCs, including Shell, ExxonMobil, and Chevron, have sold or are in the process of selling some of their onshore and shallow water assets in Nigeria. While these companies often cite a strategic focus on deepwater projects and renewable energy as part of their global transition, Renaissance Energy maintains that declining profitability in the Nigerian environment plays a significant role in these divestments.

A senior executive of the company explained that the high incidence of crude oil theft and pipeline vandalism has made it difficult for companies to maximize production potential. He emphasized that the loss of significant volumes of crude to theft reduces revenues and increases security expenditures, making operations less sustainable. In addition, the persistent foreign exchange scarcity and delayed repatriation of profits add further strain on IOCs.

“The reality is that when returns fail to justify the risks and costs of doing business, companies will naturally look elsewhere,” the executive said. “Nigeria has immense hydrocarbon resources, but without addressing key issues like oil theft, contract enforcement, and regulatory clarity, we risk losing more investors to other markets.”

Renaissance Energy pointed out that the recently enacted Petroleum Industry Act (PIA) provides a legal and fiscal framework aimed at improving investment conditions, but the benefits are yet to fully materialize. The firm called for full implementation of the PIA, with particular attention to fiscal stability, host community relations, and security measures, to rebuild investor confidence.

The company also warned that the exit of IOCs could have far-reaching implications for Nigeria’s oil and gas sector, including reduced access to technical expertise, capital inflows, and cutting-edge technology. However, it noted that divestments also present opportunities for indigenous companies to acquire assets and grow their capacities, provided they have adequate financial and technical support.

Nigeria’s oil production has fluctuated below its OPEC quota in recent years, largely due to operational disruptions and insecurity. The Nigerian National Petroleum Company Limited (NNPCL) has been working with security agencies and stakeholders to curb oil theft and improve production, but challenges persist. Renaissance Energy suggested that a multi-pronged strategy involving government, industry players, and host communities is essential for sustainable growth.

In addition to addressing security concerns, Renaissance Energy advocates for policy reforms that make Nigeria’s oil and gas sector more competitive globally. It emphasized the importance of stable fiscal regimes, streamlined regulatory processes, and targeted incentives to attract fresh investments. The company also highlighted the global shift towards renewable energy, stressing that Nigeria must leverage its hydrocarbon resources effectively while gradually diversifying into cleaner energy sources.

Industry stakeholders have echoed these sentiments, warning that Nigeria cannot afford to lose its attractiveness as an oil and gas investment destination. The country remains heavily reliant on crude oil for foreign exchange earnings and government revenues, making it critical to ensure that the sector remains viable and competitive.

Renaissance Energy concluded that the exit of IOCs should serve as a wake-up call for Nigeria to take urgent steps in addressing systemic issues hampering growth. According to the firm, ensuring an enabling environment for investors will be key to sustaining production levels, boosting government revenues, and maintaining Nigeria’s relevance in the global energy landscape.

By focusing on improved security, transparent fiscal terms, and stable regulations, Nigeria can retain and attract investors while simultaneously building capacity among indigenous players. The company reiterated that the long-term health of Nigeria’s energy sector depends on its ability to balance profitability with operational sustainability.