An energy economist, Prof. Wumi Iledare, has urged a strategic shift, warning Nigeria’s vast hydrocarbon reserves may yield little value without stronger production and investment growth.
Iledare, a Professor Emeritus of Petroleum Economics at Louisiana State University, disclosed this in an interview on Friday, April 3, 2026, in Lagos.
The Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Mrs. Oritsemeyiwa Eyesan, said reserves fell to 37.01 billion barrels as of Jan. 1, 2026.
Iledare said Nigeria’s reported reserves remain substantial, but warned that underlying structural challenges could limit their economic value without corresponding production growth.
He said reserve growth without production expansion delivered little benefit, stressing that sustainability depends on commercially recoverable and financeable proven assets.
“The real test of sustainability is no longer reserve volume, but quality, specifically what can be commercially recovered and financed as proven assets.
“In a decarbonising global economy, projects must compete on cost efficiency, carbon intensity, and fiscal attractiveness,” he said.
He warned that reserves failing these thresholds risk becoming stranded, technically viable but economically unviable in a rapidly evolving energy market.
“In this context, sustainability is shifting towards investment-grade reserves capable of attracting capital despite tightening ESG standards,” he said.
Iledare stressed that “reserves growth without commensurate production growth is economically sterile,” urging a focus on viable and financeable assets.
He said only reserves competitive in cost, carbon intensity, and fiscal terms would attract funding in an era of selective capital flows.
“Reserves that cannot compete risk becoming stranded assets,” he said, noting sustainability now depends on converting resources into bankable opportunities.
Iledare urged a shift from resource control to value creation, noting that production growth depends more on investor confidence than resource size.
He acknowledged the Petroleum Industry Act as progress, but called for refinement in cost recovery limits, contract stability, and fiscal clarity.
“Capital does not respond to reserves; it responds to risk-adjusted returns,” he said, stressing the need to reduce delays and improve transparency.
On gas, he described Nigeria’s position as paradoxical, with vast resources alongside persistent energy poverty and limited industrialisation.
He attributed this to treating gas as a by-product rather than a central driver of economic development.
“To unlock value, gas must be repositioned as a domestic economic catalyst,” he said.
He advocated stronger focus on gas-to-power reliability and expansion of gas-based industries, including fertiliser, petrochemicals, and methanol.
He cautioned against allowing export ambitions to overshadow domestic utilisation priorities critical for industrial growth.
On pricing, he said gas must balance affordability with commercial viability, warning failure would constrain demand and upstream investment.
Iledare noted regulatory improvements by the Nigerian Upstream Petroleum Regulatory Commission, including licensing rounds and digitalisation initiatives.
However, he stressed that investor confidence depends on consistent execution rather than policy pronouncements.
“The real test is whether regulatory actions reduce timelines, ensure transparency, and enforce rules predictably. Credibility in this sector is cumulative,” he said.
On energy transition, he said Nigeria’s challenge was sequencing, not choosing between hydrocarbons and climate commitments.
He maintained hydrocarbons, especially gas, remain essential but must be developed with greater efficiency and lower emissions.
He called for reduced gas flaring, improved carbon management, and reinvestment of revenues into energy diversification.
“Nigeria’s transition must be pragmatic, anchored on energy security, economic inclusion, and environmental responsibility,” he said.
Iledare said Nigeria’s petroleum future depends more on policy quality than reserve size in a tightening global energy landscape.
“The transition era narrows the margin for inefficiency. Nigeria needs alignment between reserves, investment frameworks, and regulatory credibility,” he said.
By Yunus Yusuf
