Udoma & Belo-Osagie: Full Export Earnings Access for IOCs To Boost Investment

Experts say CBN’s policy restoring full export proceeds access to IOCs enhances liquidity and spurs upstream investment.

The recent move by Central Bank of Nigeria (CBN) to grant International Oil Companies (IOCs) access to 100 per cent of their export proceeds mark a decisive shift in the country’s foreign exchange management strategy, experts at Udo Udoma & Belo-Osagie have said.

Describing the policy as a turning point for upstream investment competitiveness, the corporate and commercial law firm, covering energy, finance, telecoms, cross-border transactions, among others, stated that the development shifted the country from economic controls to investor-friendly FX framework.

In a policy brief, titled, “A Strategic Reset for Nigeria’s Upstream Sector: Implications of the CBN’S 2026 Cash Pooling Reforms,” the firm maintained that for banks, that also implied a heavier compliance burden, with potential sanctions for lapses under existing foreign exchange regulations.

In a circular issued on March 25, 2026, the apex bank had dismantled the cash pooling restrictions introduced in 2024, effectively allowing oil firms to freely repatriate all export earnings without retention requirements.

The directive, which took immediate effect, replaced earlier rules that mandated oil companies to retain half of their proceeds within the domestic banking system for up to 90 days.

According to Udoma & Belo-Osagie, the development reflects a broader recalibration of policy priorities, shifting from an earlier emphasis on foreign exchange liquidity retention to a more market-oriented framework designed to attract and sustain capital inflows into Nigeria’s oil and gas sector.

The law firm stated that the 2024 framework emerged at a time of acute foreign exchange pressures, when authorities sought to stabilise the naira and deepen liquidity by temporarily restricting capital outflows. Under that regime, authorised dealer banks were permitted to pool only 50 per cent of export proceeds on behalf of oil companies, with the balance subject to delayed repatriation.

While that approach supported short-term macroeconomic stability, Udo Udoma and Belo-Osagie argued that it also introduced operational constraints for international oil companies, particularly in managing global treasury functions and meeting financing obligations tied to upstream projects.

The new directive, however, restored full treasury flexibility, aligning Nigeria’s regulatory environment with prevailing global practices in the oil and gas industry, the firm stated. It said the policy was also critical at a time when competition for upstream capital had intensified, with investors increasingly favouring jurisdictions that offered predictable and efficient capital mobility.

Udoma & Bello-Osagie stated that the removal of cash pooling requirements would enhance liquidity management for oil firms, improve cash flow predictability, and simplify intercompany funding structures, all of which were essential for large-scale exploration and production investments.

The firm added that the policy also signalled regulatory responsiveness, indicating that authorities are willing to adapt frameworks in line with evolving market conditions and stakeholder engagement.

But despite the liberalisation, the firm said the central bank had retained strict compliance obligations for authorised dealer banks, which must now ensure proper documentation of all transactions and submit monthly reports to the regulator’s Trade and Exchange Department. It explained that this marked a transition from pre-transaction approvals to a post-transaction monitoring system aimed at maintaining transparency without stifling 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 liberalisationmeasure with several important legal and commercial consequences, particularly within the upstream petroleum sector where export proceeds underpin project economics.”

On the implications for 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.”

Importantly, it stated that the removal of cash pooling restrictions operated alongside existing statutory obligations, including domiciliary account requirements and local content considerations, reinforcing an integrated and commercially responsive regulatory environment.

The brief said, “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.”