Full Export Earnings Access for IOCs to Spur Investment, Says Udoma & Belo-Osagie

Legal experts from Udo Udoma & Belo-Osagie have highlighted that the Central Bank of Nigeria's (CBN) decision to permit International Oil Companies (IOCs) complete access to their export revenue represents a significant recalibration of the nation's foreign exchange management strategy. The corporate and commercial law firm, which specialises in sectors like energy, finance, and telecommunications, noted that this policy shift moves Nigeria from a position of economic controls towards a foreign exchange framework that is more attractive to investors. The firm's policy brief, titled “A Strategic Reset for Nigeria’s Upstream Sector: Implications of the CBN’S 2026 Cash Pooling Reforms,” also pointed out that banks will face increased compliance duties and potential penalties for any failures under current foreign exchange regulations.

Previously, in a circular dated March 25, 2026, the apex bank revoked the cash pooling restrictions that were put in place in 2024. This effectively grants oil companies the liberty to repatriate all their export earnings without any retention mandates. This new directive, which became effective immediately, supersedes earlier rules that required oil companies to hold half of their earnings within Nigeria's banking system for a period of up to 90 days.

Udoma & Belo-Osagie explained that this development reflects a broader adjustment in policy priorities. The focus has shifted from retaining foreign exchange liquidity to a more market-driven approach designed to attract and sustain capital into Nigeria’s oil and gas industry. The firm elaborated that the 2024 framework was introduced during a period of severe foreign exchange challenges, as authorities sought to stabilise the Naira and improve domestic liquidity through temporary restrictions on capital outflows. Under that system, authorised dealer banks were only allowed to pool 50 per cent of export proceeds for oil companies, with the remaining amount subject to delayed repatriation.

While this strategy helped achieve short-term macroeconomic stability, Udo Udoma and Belo-Osagie contended that it also created operational hurdles for international oil companies, particularly in managing their global treasury operations and meeting financial commitments related to upstream projects. The latest directive, however, reinstates full treasury flexibility for these companies, bringing Nigeria’s regulatory environment into alignment with international best practices in the oil and gas sector. The firm added that this change is particularly crucial given the heightened competition for upstream capital, where investors increasingly favour countries offering predictable and efficient capital mobility.

Udoma & Bello-Osagie indicated that the elimination of cash pooling requirements will improve liquidity management for oil companies, enhance the predictability of cash flows, and simplify intercompany funding structures. These factors are considered essential for substantial investments in exploration and production. Furthermore, the firm noted that the policy demonstrates regulatory adaptability, signalling a willingness by authorities to adjust frameworks based on evolving market conditions and dialogue with stakeholders.

Notwithstanding the liberalisation, the firm noted that the central bank has maintained stringent compliance obligations for authorised dealer banks. These banks are now responsible for ensuring proper documentation of all transactions and are required to submit monthly reports to the CBN’s Trade and Exchange Department. This represents a shift from pre-transaction approvals to a post-transaction monitoring system, aiming to preserve transparency without hindering operational efficiency.

Udoma & Bello-Osagie stated, “In practical terms, the directive restores full treasury flexibility for IOCs while maintaining a structured compliance and reporting framework through ADBs.

“The removal of the cash pooling requirement is a significant liberalisation measure with several important legal and commercial consequences, particularly within the upstream petroleum sector where export proceeds underpin project economics.”

Regarding the impact on IOC operations and investment agreements, the brief added, “IOCs that have incorporated the previous cash pooling framework into their intercompany treasury arrangements, joint operating agreements, or financing documents should review whether any consequential amendments are required.

“In particular, where FX repatriation timelines and retentions were expressly contemplated in loan covenants, offtake arrangements, or cash waterfall provisions, legal counsel should assess the impact of this change.

“Project finance structures, reserve-based lending arrangements and upstream development financing models may also require recalibration to reflect restored cash flow flexibility and revised assumptions around fund mobility.”

Crucially, the firm highlighted that the lifting of cash pooling restrictions operates in conjunction with existing statutory requirements, such as domiciliary account rules and local content provisions, thereby fostering an integrated and commercially responsive regulatory environment.

The brief concluded, “For the Nigerian economy, the development reinforces ongoing efforts to deepen the FX market, strengthen investor confidence and position Nigeria as a competitive destination for upstream oil and gas investment.

“For IOCs and investors, the restoration of full access to export proceeds enhances liquidity management, improves cash flow predictability and supports more efficient capital allocation decisions within global portfolios.”