“These divestments are not business as usual; they are the final warning bells of an industry in freefall. The multinationals are not just retreating; they are fleeing a sinking ship.”

The sun Is setting on Nigeria’s oil industry. Once the heartbeat of the nation’s economy, a beacon of wealth and power, Nigeria’s oil sector now stands on the brink of collapse, suffocated by years of mismanagement, corruption, and geopolitical instability. The recent exodus of multinational oil giants like Shell, TotalEnergies, Chevron, and ExxonMobil, divesting from onshore assets, is more than a corporate reshuffling. It is an ominous signal that the golden era of Nigeria’s oil wealth has ended.

For nearly seven decades, Nigeria’s oil fields were a crown jewel in Shell’s global portfolio—a strategic asset that underpinned the wealth of one of the world’s largest oil companies. Today, Shell is pulling out, selling off its onshore operations to local companies that lack the financial muscle and technical expertise to sustain them. TotalEnergies, once an eager player in Nigeria’s oil boom, has followed suit, shedding its stake in Shell’s subsidiary. These divestments are not business as usual; they are the final warning bells of an industry in freefall. The multinationals are not just retreating; they are fleeing a sinking ship. They are leaving behind an oil sector beset by rampant insecurity, chronic underinvestment, and environmental degradation that now threatens Nigeria’s economic future.

The collapse of Nigeria’s oil industry was not a sudden disaster but a long, predictable decline, ignored by successive governments too reliant on oil revenues to enact the necessary reforms. Since 2005, oil production has plummeted nearly 50 percent, dragged down by chronic insecurity, oil theft, and deteriorating infrastructure in the Niger Delta. For oil majors, the cost of doing business in Nigeria has become untenable. Where Saudi Arabia can produce oil for less than $8 a barrel, Nigeria’s production costs have ballooned to upwards of $48 a barrel—fueled by corruption, bureaucratic inefficiencies, and the ever-present threat of violence. As global oil markets shift toward renewable energy and stricter environmental regulations, Nigeria’s oil will become increasingly uncompetitive. The question is no longer if Nigeria’s oil will run out but when.

The Nigerian government has long relied on oil to fund over half of its national budget and more than 80 percent of its export earnings. But as production declines, so too do the prospects for future growth. In a world that is rapidly decarbonizing, Nigeria’s oil wealth is becoming a relic of the past. The government’s response—talk of diversification into natural gas—rings hollow. Nigeria may hold the largest natural gas reserves in Africa, but its infrastructure is woefully unprepared to exploit this potential. Nigeria LNG, once a crown jewel, now operates at less than half capacity, struggling with supply disruptions, and an inability to curb the chronic flaring of gas. With LNG exports down by 35 percent since 2020, the future of Nigeria’s gas industry looks no brighter than oil.

As the oil majors make their exit, the scars of their presence remain. The Niger Delta, once fertile and rich in biodiversity, has been transformed into one of the most polluted regions on Earth. Abandoned pipelines snake through the landscape, spewing oil into rivers and farmlands, rendering vast tracts of land unusable and leaving communities destitute. For decades, the people of the Niger Delta have borne the brunt of environmental destruction while reaping few of the benefits from the oil boom. Now, with the industry in retreat, they are left with poisoned waters, failing infrastructure, and empty promises of remediation.

Environmental cleanup has been woefully inadequate, despite years of legal battles and public pressure. The Nigerian government, distracted by its own internal dysfunction and corruption, has failed to hold departing oil companies accountable for the damage they have caused. As the oil wells run dry, so too will the livelihoods of millions who once relied on this industry. The collapse of Nigeria’s oil sector is not just an economic crisis; it is a humanitarian and environmental catastrophe in the making.

Unless Nigeria takes swift and decisive action, it risks becoming a fossil fuel graveyard—a nation stuck in the twilight of an oil age that has passed it by. The government must recognize the scale of the crisis facing the country. Cosmetic solutions and empty rhetoric will no longer suffice. Diversification must become more than just a slogan; it must be a coordinated, well-funded effort to shift the economy away from its dependence on oil and gas. Investments in renewable energy, infrastructure development, and agricultural reform must take precedence if Nigeria is to avoid the fate of becoming a failed petrostate.

The collapse of Nigeria’s oil industry is a wake-up call. The time for complacency is over. If Nigeria does not confront its energy crisis head-on, the consequences will be devastating—not just for the economy, but for the very fabric of the nation. The wells are running dry, and so too are the prospects for a better future. The clock is ticking. (BusinessDay Editorial)

Update news