The Nigerian Oil Well Illusion: How Licences Became Ownership by Another Name

By P.L. Osakwe

■ INTRODUCTION

In the land of black gold, where crude oil flows beneath the soil and sea, one truth remains buried beneath layers of legalese and power politics: no Nigerian citizen owns an oil well. And yet, across the country, the names of a few powerful individuals are whispered as the "owners" of oil blocks, marginal fields, and entire wells. In Nigeria, a place where poverty and plenty co-exist uneasily, oil licences have become something more — not just tools of exploration, but badges of ownership, wealth, and power. But how did we get here? And what does the law really say?

This article unveils the legal illusions and systemic loopholes that have allowed a handful of elites to treat public mineral resources as private empires, even as the Nigerian Constitution insists otherwise.

1. THE LEGAL REALITY: WHO OWNS NIGERIA'S OIL?

1.1 Section 44(3) of the Nigerian Constitution

The 1999 Constitution of the Federal Republic of Nigeria is unambiguous:

"The entire property in and control of all minerals, mineral oils and natural gas in, under or upon any land in Nigeria... shall vest in the Government of the Federation."

This means that ownership of oil and all mineral resources is vested exclusively in the Federal Government, not in any private individual, company, or community. The purpose is clear: oil is a national asset, meant for the collective benefit of all Nigerians, not for private accumulation.

1.2 The Petroleum Industry Act (PIA) 2021

The PIA reinforces this framework. Section 1 of the PIA affirms government ownership and introduces new governance structures through the Nigerian Upstream Regulatory Commission (NURC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). These agencies now regulate how oil assets are allocated and managed.
Yet, despite these laws, we find a growing list of individuals referred to as "owners of oil wells." The contradiction is not just semantic — it is structural and systemic.

2. THE PRACTICAL REALITY: WHEN LICENCE BECOMES OWNERSHIP

2.1 What Is Actually Licensed?

In theory, what individuals and corporations receive is a licence — a permission to explore, prospect, and produce petroleum resources. These licences fall into several categories:

• Oil Exploration Licence (OEL) – grants the non-exclusive right to explore for petroleum.
• Oil Prospecting Licence (OPL) – gives the exclusive right to explore and prospect for petroleum in a defined area.
• Oil Mining Lease (OML) – grants the right to win, work, carry away and dispose of petroleum.
Crucially, none of these confer ownership.
The government retains the title to the resource. The licence holder merely operates on behalf of the nation, under regulated conditions.

2.2 How Licences Mimic Ownership

□ Despite the legal limitations, licence holders often behave, and are treated as if they own the oil blocks outright. This illusion is sustained by:

□ Transferability: Licences and leases can be sold, assigned, or inherited with government approval. This creates a shadow market for oil assets.

□ Duration and Renewal: Some licences span decades and are easily renewable, mimicking permanent ownership.

□ Revenue Rights: Operators extract, sell, and profit from oil, with minimal state interference. The state collects royalties, but the profit margin for licensees is often disproportionate.

□ Lack of Oversight: Regulatory capture and political patronage have weakened the government’s ability to monitor or revoke licences, further entrenching elite control.

3. WHO REALLY BENEFITS? FOLLOWING THE OIL MONEY

3.1 The Oil Well Aristocracy.

Nigeria's list of oil block "owners" is not found in any transparent public registry. Instead, it exists in power circles — former military generals, political godfathers, and well-connected businessmen. These individuals leverage state connections to acquire OPLs and OMLs at undervalued costs and then partner with foreign multinationals for technical operations. The profits? Massive. The benefit to the ordinary Nigerian? Minimal.

3.2 Marginal Fields and the Myth of Inclusion.

To democratize access to oil wealth, Nigeria introduced marginal field bids — small oil fields left undeveloped by major operators. The policy was meant to empower indigenous companies. Yet, many of these fields still end up in the hands of shell companies or political proxies, reinforcing elite dominance under the guise of inclusion.

3.3 Communities Without Compensation.

Ironically, the communities sitting atop these oil-rich lands receive the least. Environmental degradation, displacement, and poverty plague areas like the Niger Delta, while profits flow to Lagos, Abuja, Geneva, and Dubai. Ownership illusions for the few translate to bitter realities for the many.

4. THE LAW VERSUS PRACTICE: WHERE DOES THE BUCK STOP?

4.1 Regulatory Ambiguity
The Petroleum Industry Act tries to plug gaps but still allows wide ministerial discretion in licence awards. The absence of a strong licensing transparency regime perpetuates abuse. The PIA mandates host community development but offers no direct equity to citizens or true ownership models.

4.2 The Role of NNPC Ltd.
With the commercialization of NNPC into a limited liability company under the PIA, oil asset management is now driven by profit. While this may improve efficiency, it also raises questions: Who are the shareholders? What public interest do they serve? Can public wealth be privatized through a corporate backdoor?

5. TOWARDS A NEW PARADIGM: RECLAIMING PUBLIC RESOURCES
If oil is truly a national resource, Nigeria must go beyond legal platitudes. Several reforms are urgently needed:

■ Full Transparency: Publish all oil licence holders, contract terms, and field-level production data. Let Nigerians know who controls what.
■ Community Equity Models: Go beyond development funds. Give host communities direct equity stakes in oil operations.
■ Time-Limited Licences: Reduce licence durations and eliminate indefinite renewals.
■ Revoke Dormant Assets: Any field left undeveloped for a set period should revert to the state.
■ Constitutional Reforms: Clarify mineral ownership with mechanisms for public oversight and redistribution of wealth.

■ CONCLUSION: THE ILLUSION MUST END

Nigeria’s oil belongs to the people. That is what the law says. Yet, in practice, a few have hijacked the benefits through a clever manipulation of licences that function as private ownership. The illusion is dangerous, it breeds inequality, fuels corruption, and undermines national unity.

Licences were never meant to be deeds of ownership. They were meant to serve the public interest. If Nigeria is to move from a rentier state to a truly inclusive economy, the myth of oil well ownership must be shattered. It is time to reclaim the commons from the hands of the few.