Green Future or Black Gold? Is Nigeria’s Economic Future Still in Oil?

Amid internal challenges, the promise of a new Dangote Refinery and the world’s shift towards renewable energy, Nigeria (Africa’s largest holder of proven oil reserves) grapples with the pivotal question of whether to continue its allegiance to OPEC or chart an independent course in the labyrinthine world of oil geopolitics.

As Africa’s largest holder of proven oil reserves and one of the top 15 global oil producers, Nigeria’s oil industry towers over its economy. The Nigerian National Petroleum Corporation (NNPC) Limited, the state-owned behemoth, presides over an industry churning out over 1.5 million barrels per day from approximately 37 billion barrels of reserves. These treasure troves of black gold, concentrated mainly in the Niger Delta, accounts for nine per cent of Nigeria’s GDP and for almost 90 per cent of all export value. However, the oil wealth is a double-edged sword. Vandalism of infrastructure, deep-seated corruption, rampant oil theft and the ecological desecration of the Niger Delta continue to siphon off potential gains, casting a shadow over the country’s economic narrative. Sensing the unsustainable dynamics of this black gold dependency and the world’s accelerating pivot towards renewable energy, Nigeria’s government has attempted to diversify its economic structure. Yet, the towering presence of oil continues to shape the country’s economic landscape as of 2023.

Riding the rollercoaster of global oil prices, Nigeria, one of Africa’s prime petrostates, faces a contentious question: should it continue its allegiance to the Organization of Petroleum Exporting Countries (OPEC) or chart its own course? The oil-rich nation finds itself in an existential tug-of-war between the conventional, solidarity-oriented wisdom of OPEC membership and the allure of unshackled sovereignty in the high-stakes arena of oil geopolitics. A labyrinthine issue, it demands a deep dive into Nigeria’s economic realities, its role within OPEC and the global energy landscape’s unfolding contours.


Navigating the turbulent seas of global oil markets, Nigeria, for a significant period, held the enviable position as Africa’s largest oil producer. However, the tide has turned in recent years, with Angola wresting away the coveted title. Several factors precipitated Nigeria’s slip from its pole position. The foremost among them is the increased frequency and intensity of militant attacks on oil facilities in the Niger Delta region, Nigeria’s oil-rich heartland. These attacks have disrupted production and deterred foreign investment, causing a significant slump in the country’s output.

In stark contrast, Angola, a nation once ravaged by civil war, has capitalized on the relative stability in the years following the conflict to ramp up its oil production. Significant foreign investment, driven in part by favourable government policies and the promise of untapped deep-water reserves, has contributed to Angola’s oil boom. Furthermore, Angola’s oil fields are offshore, making them less susceptible to the kind of attacks witnessed in Nigeria.

Corruption has been another anchor dragging down Nigeria’s oil sector. Despite attempts at reform, NNPC Limited has been dogged by allegations of financial mismanagement and corruption, with revenues seemingly disappearing into a black hole. This has hampered investment into infrastructure and exploration, further straining the sector.

Lastly, OPEC-imposed production cuts have also played their part in Nigeria’s decline. Designed to stabilize global oil prices, these cuts have disproportionately impacted Nigeria, given its reliance on oil revenues. Despite having large reserves, Nigeria has often found its hands tied, unable to ramp up production due to OPEC’s restrictions.

Thus, a complex mix of security challenges, infrastructural bottlenecks, corruption and external constraints have seen Nigeria cede its position as Africa’s top oil producer to Angola. The road to regaining the top spot is steep, demanding security and infrastructure enhancements, robust governance and strategic navigation of international oil politics.


Despite being one of the world’s leading oil producers, Nigeria’s predicament has been one of deep irony. The nation is rich in crude oil but relies heavily on importing refined petroleum products due to its lack of domestic refining capacity. This paradox has meant that Nigeria often pays through the nose for its gasoline and has to grapple with the whims of international oil prices and exchange rate fluctuations.

With the above in mind, the countdown is on for the launch of Aliko Dangote’s audacious project, a behemoth oil refinery nestled on the edge of Lagos, Nigeria. Given its promised capacity to refine 650,000 barrels of oil per day, the Dangote Refinery is poised to be Africa’s largest oil refinery and one of the biggest in the world, a veritable game-changer in Nigeria’s oil narrative.

Yet, the project hinges on a crucial assumption: Nigeria’s ability to supply it with enough crude oil. With the country’s production often waning under the weight of infrastructural challenges and security threats in the Niger Delta region, the optimism surrounding the refinery’s potential demands a reality check. According to OPEC’s rules, member states’ crude oil production is often capped to help stabilize global oil prices. For Nigeria, this arrangement hardly suits the ambitious Dangote project. To ensure the refinery runs at full throttle, Nigeria must lobby for a higher production quota or seek exemptions from OPEC’s restrictions—an endeavour easier said than done.

Moreover, the refinery’s success necessitates an extensive overhaul of Nigeria’s oil sector. The existing infrastructure, marred by frequent disruptions and oil theft, will need to be robust enough to supply the colossal volume of crude required by the refinery. This means intensifying security measures in the Niger Delta, cracking down on oil theft and investing in pipelines, transport and storage facilities. Nonetheless, the Dangote Refinery represents an opportunity for Nigeria to seize control of its oil narrative, turning the page on decades of dependence on imported petroleum products. But realizing this potential hinges on the crucial task of maximizing domestic supply—a challenge that will test the mettle of Nigeria’s oil sector in the coming years.


As the tectonic plates of the global energy landscape shift, Nigeria finds itself at a crossroads. The world is transitioning towards a decarbonized future, a trend underscored by the rise of electric vehicles, renewable energy technologies and mounting pressure to meet climate targets. Against this backdrop, Nigeria’s membership in OPEC comes under the spotlight.

On the global stage of oil politics, the interests of OPEC and its member, Nigeria, appear to be dancing to divergent tunes. OPEC, under the de facto leadership of Saudi Arabia, maintains a keen interest in keeping oil prices high—a strategy that shores up the revenues of its member states, many of whom, like Nigeria, depend heavily on oil exports for their economic well-being. However, the specific interests of Nigeria, particularly in the wake of its fuel subsidy removal, are veering towards the affordability end of the spectrum, revealing a fascinating clash of interests within the oil cartel.

Balancing these diverging interests is a precarious act for Nigeria. Lower global oil prices may ease domestic pressures but can deplete government revenues and foreign exchange earnings. On the other hand, higher global prices can boost the government’s coffers but risk stoking inflation and social unrest at home. The ensuing balancing act poses a considerable challenge for Nigeria, placing it at the crossroads of global oil politics and domestic economic policy. As the country grapples with these contradictory dynamics, its future decisions within OPEC will provide a fascinating insight into how a nation can reconcile its domestic needs with the dictates of global commodity markets.

At the same time, a decarbonized world, driven by global commitments to limit temperature rises under the Paris Agreement, could significantly reduce the demand for oil. In this scenario, the ability of OPEC to manipulate oil prices by adjusting production might be diminished. Instead, the market could become a buyers’ market, where those nations with the cheapest and cleanest production methods reap the rewards. With its oil reserves primarily located in the ecologically fragile Niger Delta region and production often marred by social and environmental challenges, Nigeria might find itself disadvantaged in such a scenario.

Moreover, the Dangote Refinery’s potential to meet domestic demand for petroleum products could alter the cost-benefit analysis of OPEC membership for Nigeria. Should the country be able to secure its domestic energy security and even transition to becoming a net exporter of refined products, the necessity of aligning with OPEC’s production quotas, often a constraint on maximizing output, may become less compelling.

However, leaving OPEC would not be without its risks. The organization provides a platform for coordination and collective bargaining, particularly useful in times of oil market volatility. Nigeria would also lose the guidance and shared expertise that comes with being part of a global oil cartel. Then there’s the elephant in the room—the uncertain future of OPEC+, an expanded alliance that includes OPEC members and other significant producers like Russia. Recent years have witnessed a crescendo of geopolitical tensions within OPEC+, particularly between Saudi Arabia and Russia. The harmony of this oil-producing supergroup appears increasingly fragile. Should this alliance fray or dissolve, the repercussions could be profound, potentially upending established norms of global oil production and pricing. For Nigeria, navigating these uncertainties requires a blend of astute diplomacy, strategic planning and a keen eye on national interests.

Ultimately, Nigeria’s OPEC membership is entangled with the broader question of how the country navigates the global shift towards decarbonization and market independence. As the sands of the global energy landscape shift, Nigeria will need to evaluate its position carefully, balancing short-term economic realities with longer-term sustainability and energy security considerations.


Nigeria can look to recent history for guidance regarding a potential exit from OPEC. In December 2018, Qatar sent shockwaves through the world of oil politics by announcing its departure from OPEC, a move that upended the conventional wisdom surrounding the oil cartel. As one of the smaller oil producers within OPEC but the world’s biggest liquefied natural gas exporter, Qatar’s decision was not impactful from an oil production standpoint. However, it was symbolically potent, marking the first Middle Eastern country to leave the bloc since its inception in 1960. Qatar cited a desire to focus on its lucrative natural gas sector as the primary reason for its exit. However, one cannot overlook the shadow of geopolitics, with Qatar finding itself increasingly isolated due to the ongoing diplomatic crisis with Saudi Arabia and other Gulf states. Although mainly symbolic, the ramifications of this departure present an intriguing case for other OPEC members considering similar moves. The exit of Qatar exemplifies that OPEC membership, while beneficial, is not necessarily the alpha and omega of oil politics and that countries can find their unique paths outside the cartel.

A comparison with Canada, a non-OPEC country, further illuminates this theme. Canada has vast oil reserves, predominantly in the form of oil sands, which yield heavier and lower-quality crude compared to Nigeria’s light, sweet oil. The extraction process is also more environmentally impactful and costly. Despite these challenges, Canada has managed to carve out a niche for itself as a major oil producer. Its success hinges on a combination of factors. It has established robust trading relationships, primarily with the United States, which consumes the lion’s share of its oil exports. Canada’s stable political climate, rule of law and established infrastructure make it an attractive and reliable partner in the volatile world of oil trade. It is worth noting that these achievements have been made outside OPEC’s fold, underscoring that non-OPEC countries can indeed thrive in the global oil market.

In essence, the cases of Qatar and Canada present insightful lessons for Nigeria as it contemplates its future within OPEC. These examples underline that there are viable paths outside the cartel, provided countries can leverage their unique strengths, forge strong trade partnerships and navigate the complexities of oil politics with dexterity and foresight.

Charting a course beyond OPEC’s fold presents Nigeria with an intriguing mix of challenges and opportunities. Indeed, the country’s prospects as a non-OPEC member could shape a novel narrative in its oil industry and impact its geopolitical standing.

Exiting OPEC would thrust Nigeria into the realm of self-negotiation in international oil trading—a double-edged sword. On the one hand, Nigeria could directly negotiate contracts based on its own interests without being encumbered by OPEC’s blanket decisions. This newfound freedom could potentially enhance Nigeria’s leverage, especially given the high quality of its Bonny Light crude. As Rachel Ziemba, geo-economic and country risk expert, expands upon ‘Nigeria has an opportunity to focus on better capturing oil and gas in sustainable ways – for example, monetizing gas rather than flaring it and investing in new technologies to reduce the lifecycle emissions of production.’ However, the flip side is that Nigeria would be stripped of OPEC’s collective bargaining power, which might expose it to the whims of larger and more powerful economies.

Nigeria would also enjoy increased flexibility in the international market outside OPEC’s umbrella. It could independently adapt to fluctuations in global oil demand and price shifts, allowing for a more responsive and agile strategy. However, with this flexibility comes the risk of heightened exposure to market volatility—a factor Nigeria would need to account for in its strategic calculus.

Finally, Nigeria’s exit from OPEC could facilitate a potential leadership role in fostering regional energy cooperation in West Africa, particularly in collaboration with emerging oil players like Senegal. This regional bloc could pursue shared interests like energy security, infrastructure development and environmental stewardship. A coordinated regional approach could also enhance negotiating power and foster a more resilient and integrated energy market in West Africa.

While exiting OPEC would undeniably present challenges for Nigeria, it also opens up an array of opportunities. The prospect of self-negotiation, regulatory autonomy, increased market flexibility and a potential regional leadership role all point towards a potential new chapter in Nigeria’s oil narrative—a chapter where Nigeria, with careful planning and astute strategy, could take greater control of its oil destiny.


Amid the swirling debates over Nigeria’s OPEC membership, it is critical to acknowledge the weighty counterarguments in favour of remaining within the oil cartel. The pro-OPEC camp, which boasts a substantial following, underscores a set of advantages that are far from trivial.

OPEC’s principal strength lies in its collective bargaining power. As a bloc, the organization wields significant influence over the global oil market, a clout that no single member could wield independently. For Nigeria, OPEC membership provides a global platform to negotiate and influence international oil policies, a privilege that can enhance the country’s geopolitical standing. Another key point revolves around market stability. Although often seen as restrictive, OPEC’s production quotas play a crucial role in preventing price volatility in the global oil market. It acts as a stabilizing force, a buffer against the market’s inherent capriciousness. For Nigeria, a country heavily reliant on oil revenues, this stability is a valuable safeguard against potential market downturns.

Furthermore, OPEC facilitates a shared pool of knowledge and expertise among its members. As part of the bloc, Nigeria has access to this collective wisdom, which can be beneficial in dealing with common challenges, such as managing oil revenues, investing in infrastructure and dealing with environmental concerns.

Lastly, the organization provides a platform for Nigeria in a global arena, alongside major oil-producing nations. This visibility can be pivotal in advancing the country’s national interests and in shaping international policies.

The pro-OPEC stance, although often overlooked amid the clamour for autonomy and self-regulation, offers a compelling case. It reminds us that OPEC membership, for all its perceived constraints, can bring substantial benefits to Nigeria, from collective bargaining power to market stability and access to a shared reservoir of expertise—a reminder that in the labyrinthine world of oil politics, there are no straightforward paths; only careful, nuanced navigation.

Navigating the complex tapestry of global oil politics, Nigeria finds itself at an inflection point, weighing the pros and cons of continued OPEC membership. This discussion has traversed a wide range of issues—from the allure of autonomous negotiations and regulatory freedom, to the prospect of regional leadership in West Africa and the comforting stability offered by OPEC framework.

Central to this debate is Nigeria’s future energy strategy. With the Dangote refinery looming large on the horizon, the case for domestic oil supply control is compelling. Yet, the oil-rich nation must also contend with OPEC’s balancing act, which keeps global oil prices from plummeting and shields Nigeria’s significant oil export revenue.

As a non-OPEC member, Nigeria could seize its oil production and pricing reins, negotiate freely on the international stage and potentially join forces with other regional producers like Senegal to shape West Africa’s energy future. Yet, exiting OPEC is not without risks. The comfort of collective bargaining power, shared knowledge and a stabilizing hand in a volatile market are benefits that Nigeria would have to forgo.

The crux of the matter lies not in a simple ‘stay or leave’ binary but in a nuanced evaluation of Nigeria’s energy landscape, domestic needs and geopolitical aspirations. The decision has far-reaching implications, for it is not merely about today’s oil market but also about how Nigeria navigates the energy transition toward a less carbon-intensive future.

Whether Nigeria chooses to sail with OPEC’s fleet or chart its independent course in the vast seas of the global oil market, the journey ahead will undeniably be filled with both challenges and opportunities. The country’s strategic choice will undoubtedly shape its energy narrative in the coming years—a story that the world will watch with keen interest

The views, thoughts, and opinions published in The Republic belong solely to the author and are not necessarily the views of The Republic or its editors. We want to hear what you think about this article. Submit a letter to the editors by writing to [email protected].