Nigeria Set For $10bn Oil & Gas Investment Surge Amid Industry Reforms
Nigeria’s oil and gas sector is on the cusp of attracting over $10bn in new investments as a series of strategic acquisitions, policy reforms, and infrastructure developments aim to revitalize the industry and boost economic growth.
An economics expert at the Lagos Business School, Professor Bongo Adi, expressed optimism about the sector’s outlook in his Oil and Gas Performance and Outlook tagged ‘Oil Production and Revenue Challenges: Resolving Issues around Crude Supply and Pricing, and High Energy Costs,’ citing several key initiatives and challenges during a recent discussion.
According to Adi, among the most significant developments is Seplat Energy’s acquisition of 583 oil wells from Mobil Producing Nigeria Unlimited (MPNU), which is expected to substantially increase crude oil production and expand the supply of natural gas feedstock.
This is complemented by Renaissance Energy’s recent purchase of over 1,000 wells from Shell Petroleum Development Company (SPDC), a move anticipated to further enhance production capacity and alleviate feedstock shortages that have hindered Nigeria’s liquefied natural gas (LNG) industry, currently operating at only 40 per cent capacity due to years of underinvestment in the upstream sector.
Adding to the momentum is the Final Investment Decision (FID) by Shell Nigeria Exploration and Production Company (SNEPCo) and its partners on a major offshore gas project. This development, slated to come on stream by 2029, is poised to significantly boost Nigeria’s natural gas output, advancing the country’s transition toward a gas-driven economy.
The government has also approved a fiscal framework designed to attract investments into Nigeria’s deep-water oil and gas sector. This framework, which awaits passage by the National Assembly, seeks to unlock the country’s vast offshore energy potential, with 67 per cent of its resources still undeveloped.
By providing tax credits for offshore developments and incentives for greenfield projects in onshore and shallow-water locations that begin production by 2029, the framework is expected to create a more favourable environment for investors and accelerate sector growth.
Adi noted that despite these promising initiatives, the industry continues to grapple with several challenges.
Persistent insecurity in oil-producing regions has led to declining crude liftings, particularly from Bonny Terminal.
He said this has been cited as one of the primary reasons for the departure of international oil companies from Nigeria.
Additionally, inefficiencies in infrastructure development, such as joint venture partners constructing multiple pipelines along the same corridor, have hindered national productive efficiency.
The experts argue that reforms must focus on decoupling NNPCL from government bureaucracy, drawing inspiration from the successful NLNG model.
Adi said privatizing refineries is another critical recommendation, as government ownership has been associated with inefficiency and underperformance.
A shift toward privatization could unlock the full potential of these assets. Additionally, revisiting the current practice of selling crude oil to refineries like Dangote in naira is deemed unsustainable. A crude refining-for-fee model is seen as a more economically viable alternative.
Professor Adi emphasized that while these initiatives and reforms present transformative opportunities, systemic challenges must be addressed to ensure their success.
He highlighted the need for reforms that complement demand-side efforts, stressing the importance of policies that promote competition, enhance efficiency, and deliver equitable benefits to all Nigerians.
“A situation where the minimum wage can only afford 70 litres of fuel for the average Nigerian is unjustifiable,” he stated, calling for a balanced approach that prioritizes energy affordability alongside economic growth.
Nigeria Set For $10bn Oil & Gas Investment Surge Amid Industry Reforms is first published on The Whistler Newspaper
