Nigeria’s energy sector and national security

By Rekpene Bassey

Nigeria’s oil wealth has long been both a blessing and a curse. On the one hand, it fuels growth, but on the other hand, it also entrenches dependency. Today, a new controversy threatens to reshape the sector and raise profound national security questions.

The Federal Government’s plan to divest its equity in key upstream oil and gas joint ventures has sparked concern across boardrooms, oil towns, and policy circles.

Critics argue the move could compromise sovereignty, economic stability, and the nation’s strategic control of its most vital resource.

At the centre of the debate are government stakes in joint ventures with Renaissance Africa Energy Company, Oando, and Seplat Energy Producing Nigeria Unlimited. These companies, alongside international oil giants, dominate Nigeria’s oil and gas production sector.

Combined, joint ventures account for nearly 40 per cent of the country’s daily crude output, which in 2024 averaged 1.35 million barrels per day according to OPEC figures. To sell down these interests, opponents argue, is to hand over the keys of Nigeria’s energy economy.

Supporters of divestment argue that private capital can revitalise a sector plagued by inefficiency, underinvestment, and corruption. Government ownership through the Nigerian National Petroleum Company Limited (NNPCL) has often led to political interference, bureaucratic inertia, and corruption scandals.

By exiting the scene, Abuja could reduce fiscal burdens while encouraging greater efficiency. However, such arguments overlook deeper risks.

The first is sovereignty. For decades, the government’s equity in joint ventures has ensured a seat at the table when decisions are made about production, investment, and community obligations.

Ceding control to private players, critics warn, could marginalise the state’s influence over strategic assets. In a world where energy still equates to power, the stakes extend beyond revenue; they touch the very fabric of national security.

Second is economic stability. Oil remains Nigeria’s lifeblood, contributing about 90 per cent of foreign exchange earnings and roughly half of government revenues, according to the Central Bank of Nigeria.

Divesting state equity threatens to reduce direct revenue streams, forcing the government to borrow more deeply. With Nigeria’s public debt already at $114 billion as of mid-2024, the timing could hardly be worse.

Then there is the human cost. The Petroleum Industry Act (PIA), passed in 2021 after nearly two decades of debate, was designed to ensure transparency and local participation. By shifting power to private operators, divestment risks undermine local content provisions and sideline indigenous firms.

Analysts warn of potential job losses in oil-producing regions, where unemployment and poverty already serve as breeding grounds for unrest and militancy.

Nigeria’s Niger Delta illustrates the peril. The region, which produces the bulk of the country’s oil, has witnessed decades of militancy, pipeline sabotage, and kidnappings. Divestment could reignite tensions if communities perceive that profits are being siphoned off while their livelihoods remain precarious.

“When you take away government equity, you take away accountability to the people,” says Port Harcourt–based activist Joy Boma. “Private companies answer to shareholders, not communities.”

Transparency is another sticking point. Critics argue that the government has provided little explanation for the sudden urgency of divestment. The terms of sale, expected valuations, and projected benefits remain vague.

This lack of clarity raises concerns about sweetheart deals and insider trading, reminiscent of Nigeria’s complex history of asset privatisation. In the 2000s, the botched sales of state-owned enterprises in telecoms and steel left lasting scars.

The proposed amendments to the PIA compound unease. Civil society groups argue that weakening regulatory oversight at a time of wholesale restructuring risks leaves the sector vulnerable to exploitation.

Already, Nigeria loses an estimated 200,000 barrels of oil per day to theft, according to the Nigerian Extractive Industries Transparency Initiative (NEITI). A weakened regulatory framework could worsen leakages in both revenue and accountability.

For energy security experts, the timing of the divestment is equally troubling. Globally, oil remains central to geopolitics, even as nations transition toward renewable energy sources. With proven reserves of 37 billion barrels and 200 trillion cubic feet of natural gas, Nigeria retains significant leverage. Relinquishing state control over these assets could diminish Abuja’s bargaining power in both regional and international arenas.

The Nigerian National Petroleum Company Limited itself has struggled with identity since its 2021 transition into a commercial entity. Its dual role as regulator and operator has been a source of confusion. Yet insiders warn that divestment will hollow out its operational capacity, leaving it a toothless overseer rather than a robust national champion.

Beyond economics, the potential security implications loom large. Nigeria has a history of resource-driven conflict, from the Biafran War to the Niger Delta militancy. Analysts warn that stripping the state of direct stakes in oil production could embolden non-state actors, fuelling instability in regions already fragile from banditry, terrorism, and communal clashes.

“Control of resources is ultimately control of power,” notes Abuja-based security scholar Idris Salami. “When the state relinquishes that, it risks undermining its own legitimacy.”

Ordinary Nigerians, meanwhile, remain sceptical of the government’s motives. A 2024 survey by SBM Intelligence found that 71 per cent of respondents believed oil revenues are mismanaged. In such an environment of mistrust, divestment risks being interpreted less as reform and more as another opportunity for elites to enrich themselves.

The global context adds urgency. As oil majors recalibrate their portfolios amid the energy transition, African assets are increasingly viewed as both high-risk and high-reward. Divestment by the Nigerian government at this moment could signal weakness rather than strength, reducing its leverage in negotiations with international partners.

Some economists argue that the risks outweigh any potential short-term benefits. While divestment might free up cash for immediate fiscal relief, the long-term consequences of losing strategic assets could be far more costly. With Nigeria’s poverty rate climbing to 46 per cent in 2023, according to the World Bank, the margin for policy error is vanishingly thin.

The fate of this policy will ultimately rest on political will. Lawmakers, civil society groups, and oil-producing communities are already mobilising against the plan. Yet, without a transparent and inclusive debate, the government risks pressing ahead in ways that could deepen mistrust and instability.

Nigeria’s oil and gas sector has always been more than an economic engine. It is the lifeblood of the state, the foundation of its budget, and the trigger of its conflicts. To divest without carefully weighing the security implications is to gamble with the very essence of national sovereignty. The stakes could not be higher.

As Abuja weighs its options, one truth stands out: divestment may appear to be fiscal prudence on paper, but in practice, it could strip Nigeria of its strategic shield. Energy is power. And power, once lost, is rarely regained.

*Rekpene Bassey is the President of the African Council on Narcotics and a Specialist in Security, Drug, and Crime Prevention.