Who Owns the Oil in Nigeria?
At first glance, the answer seems straightforward: the Nigerian government owns the oil. But when you look closer, the reality is more layered.
By law, all petroleum resources in Nigeria belong to the Federal Government. This position is clearly stated in the Petroleum Act of 1969 and reaffirmed in the Petroleum Industry Act (PIA) of 2021. These laws establish that any oil found under land, rivers, or offshore areas is not the property of individuals, communities, or even state governments. It is owned by the nation, and managed by the federal government on behalf of the people.
However, owning the oil is one thing. Extracting it is another.
The Nigerian government does not carry out most oil exploration and production directly. Instead, it operates through its national oil company, the Nigerian National Petroleum Company Limited (NNPC Ltd). NNPC represents the government’s interests in the oil sector, but it rarely works alone. Over the years, Nigeria has relied heavily on partnerships with international oil companies such as Shell, Chevron, ExxonMobil, and TotalEnergies.
These companies bring in the technical expertise, equipment, and capital required to find and produce oil, especially in offshore and deepwater operations where the costs and risks are high. The most common arrangement between NNPC and these companies has traditionally been the Joint Venture (JV) model.
Under a typical joint venture, NNPC holds the majority stake (often between 55 and 60 percent) while the foreign company or companies hold the remaining shares. Both parties contribute to funding operations and share the output based on their stake. This means that while the oil itself legally belongs to the Nigerian government, the profits from selling that oil are shared among the partners.
In addition to joint ventures, Nigeria also uses Production Sharing Contracts (PSCs), particularly for offshore fields. In this model, the international oil company usually covers the upfront costs of exploration and production. Once oil is produced, the company first recovers its costs from the output. The remaining oil, known as “profit oil,” is then split between the company and the government according to agreed terms.
Local Nigerian companies also play a growing role in the industry. Over the past two decades, there has been a deliberate push for “indigenisation,” leading to the emergence of indigenous oil firms that acquire assets from international companies or receive licenses to operate oil blocks. Even so, these companies do not own the oil in the ground. Like their foreign counterparts, they operate under licenses granted by the government and earn from production.
One of the most contested aspects of oil ownership in Nigeria involves the host communities, particularly in the Niger Delta where most of the oil is located. Despite bearing the environmental and social impact of oil production, these communities do not have legal ownership of the resources beneath their land. This has fueled decades of agitation, conflict, and demands for resource control.
The Petroleum Industry Act of 2021 attempted to address some of these concerns by introducing the Host Community Development Trust. Under this framework, oil companies are required to contribute a percentage of their operating expenses (set at 3 percent) to fund development projects in host communities. While this provides a structured benefit, it does not change the fundamental ownership structure.
So, who owns the oil in Nigeria?
Legally, the answer remains the Federal Government. But in practice, the oil industry functions through a network of partnerships. The government holds the resource, international and local companies extract it, and the revenue is shared among these players. Meanwhile, the communities where the oil is found continue to push for a greater stake in both ownership and benefits.
The result is a system where ownership is centralized, but participation and profit are distributed – unevenly, depending on where you stand.
