For four decades Nigeria’s oil industry has centred on Port Harcourt, the city in the swamps of the Niger Delta. Today, a group of Nigerian businessmen hope to make the commercial capital Lagos into an oil town, too.

Having amassed fortunes in other industries, Nigerians such as Kola Karim, Tony Elumelu and ABC Orjiakor have set their sights on oil. Unlike previous Nigerian owners of oil production rights, or blocks, they do not plan to hire foreigners to produce their crude: they want to operate assets and invest in them.

With international energy companies keen to leave onshore fields in the delta where oil theft is rife and the central government actively promoting “indigenisation” of the hydrocarbons sector, there are some grounds for optimism. “For the first time in Nigeria we are seeing material opportunities made available to new entrants, and the local companies taking on assets have very aggressive plans to grow production,” says Obo Idornigie, a senior analyst at consultants Wood Mackenzie.

The implications for Nigeria are huge. Indigenisation could mean more profits retained within the country – or at least, within its business elite – and higher production. About a third of Nigeria’s 2.4m barrels a day of crude oil output capacity lies in onshore fields, most of which have been producing for decades. Such fields are afterthoughts for the oil majors but, for local companies starting from zero production, they are crown jewels worthy of investment.

Seplat, backed by Mr Orjiakor, and Mr Karim’s Shoreline Natural Resources have both raised output rapidly after buying blocks from Shell and investing. Austin Avuru, managing director of Seplat, says greater investment by local companies could add 300,000 b/d to output.

Local companies will need access to more finance. In the past five years, they have purchased $5bn of assets from international companies. Another $2bn of deals is likely by the end of the year with Chevron selling three more blocks, and Shell expected to identify more assets for sale soon. “Without capital [indigenisation] is not going to happen,” says Mr Karim. “The winners will be the companies that have access to international capital.”

The need to raise funds to compete in auctions has favoured individuals and companies that have strong relations with banks. Magnates with backgrounds in banking have quickly come to dominate the oil sector. Several companies have sought alliances with international groups. Shoreline is part owned by London-listed Heritage; French independent oil company Maurel et Prom and Swiss trader Mercuria have stakes in Seplat.

International banks such as BNP Paribas, which have helped finance some of the acquisitions by local companies, are keen to see Nigerian companies pursue public listings abroad to show they can tap sources of cash other than debt.

An international share issue by a domestic company has proved elusive. Oando, led by Wale Tinubu with interests from petrol stations to gas supply, has been expected to tap global equity markets to complete the $1.8bn acquisition of ConocoPhillips’ Nigerian assets but a deal has yet to materialise. Attention has turned to Seplat, which has mooted a joint listing in London and Lagos.

Capital is not the only problem facing local companies. Some are finding their hopes of operating fields dashed by the state. As international oil companies sell off assets, the government is in some cases taking the opportunity to hand the right to operate to the state oil company, the Nigerian National Petroleum Corporation (NNPC). It has stakes in most blocks across Nigeria but has generally been a silent partner.

First Hydrocarbon Nigeria, Shoreline and several other local companies have purchased oil blocks only to find that the operational rights of the seller were passed to NNPC instead.

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