Oando PLC has issued a strategic wake-up call to the Nigerian energy sector, asserting that the nation’s ambitious goal of reaching 2 million barrels per day (bpd) requires a fundamental shift in its financing architecture. Speaking in a recent interview, Dr. Ainojie ‘Alex’ Irune, Chief Operating Officer of Oando PLC, argued that traditional banking models are no longer sufficient to fund the capital-intensive nature of deepwater exploration and infrastructure renewal. For the Nigerian economy, this “financing rethink” is a critical necessity; with oil still accounting for the vast majority of foreign exchange earnings, the failure to secure sustainable investment directly threatens the stability of the Naira and the nation’s fiscal health.
The economic consequence of stagnant oil production is a persistent “liquidity crunch” that ripples through every sector of the Nigerian market. Despite rising global oil prices, Nigeria has frequently struggled to meet its OPEC+ quotas due to technical outages and a lack of new “Final Investment Decisions” (FIDs). Alex Irune highlighted that the industry is at a crossroads, where the transition away from fossil fuels by Western lenders has created a “funding gap.” This suggests that Nigeria must pivot toward alternative pools—such as African-led energy banks and structured commodity-backed financing to bypass increasing “green-transition” restrictions.
Analytically, the challenge lies in the widening investment gap within the upstream sector. As International Oil Companies (IOCs) continue their divestment from onshore assets, the burden of production now falls on indigenous players who often face higher borrowing costs. From a fiscal perspective, while the Petroleum Industry Act (PIA) provided a legal roadmap, Irune noted that the “financial engine” has not yet caught up. To hit the 2 million bpd target, Nigeria requires a more aggressive influx of capital that traditional local balance sheets simply cannot carry alone.
The impact on “Energy Security” and the domestic refining revolution is another vital dimension of this discourse. As the Dangote Refinery and other modular sites scale up, the demand for local crude feedstock will intensify. Alex Irune emphasized that a failure to boost upstream output through creative financing means Nigeria might find itself in the ironic position of importing crude for its own refineries. Furthermore, he argued that the “rethink” must include a focus on gas-to-power. By integrating upstream production with domestic energy needs, Nigeria can create a self-sustaining value chain that lowers the cost of electricity for manufacturers and drives the “Renewed Hope” industrialization agenda.
Furthermore, Irune underscored the importance of “De-risking” the Nigerian energy landscape to make it “investor-ready.” Currently, capital is deterred by the dual threats of pipeline insecurity and regulatory uncertainty. He suggested that a more collaborative approach possibly through enhanced Production Sharing Contracts (PSCs) could make Nigerian assets more competitive against emerging frontiers like Guyana. By creating a “safe harbor” for capital through improved security and fiscal clarity, Nigeria can ensure that its oil remains an active asset rather than a stranded resource.
The long-term economic outlook for Nigeria hinges on its ability to transform the oil sector from a “cash cow” into a “growth engine.” As Alex Irune pointed out, the window for fossil fuel financing is narrowing globally, making speed of execution paramount. The next 24 months will be decisive; the federal government must synchronize its fiscal incentives with the realities of the global capital market. If Nigeria successfully rethinks its energy financing, it can secure the foreign reserves needed to stabilize the economy, pay down its sovereign debt, and provide the fiscal buffer necessary to achieve its 7 percent GDP growth target.
