Targeting $10 billion in oil and gas investments in the next 12-18 months, Nigeria has implemented a slate of reforms aimed at creating a more favorable investment climate and improved governance within the sector.
At the upcoming African Energy Week: Invest in African Energy 2024 conference and exhibition, an Invest in Nigeria Energies roundtable will outline the ample opportunities for investors and project developers to grow the energy value chain of Africa’s largest crude oil producer, highlighting the latest policy directives, consolidated fiscal incentives and gas utilization investment allowances.
The session places Nigerian policymakers in conversation with industry regulators and associations, exploring the latest policies, regulations and investment opportunities currently shaping the market. The discussion will be led by Heineken Lokpobiri, Nigeria’s Minister of State for Petroleum Resources (Oil); Abdulrazaq Isa, Chairman of the Independent Petroleum Producers Group of Nigeria; and Farouk Ahmed, CEO of the Nigerian Midstream and Downstream Petroleum Regulatory Authority. The discussion will feature representatives from IOCS including ExxonMobil and Chevron.
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Nigeria’s Federal Government introduced several policies earlier this year – in addition to the ongoing implementation of the Petroleum Industry Act – to reinvigorate the country’s energy sector and retain its position as a regional powerhouse. New measures aim to deliver a competitive Internal Rate of Return for oil and gas projects and attract over $10 billion in new investments within the next 12-18 months.
For new exploration, this includes streamlining contracting procedures by raising approval thresholds for PSCs and JOAs to not less than $10 million, simplifying processes and extending the duration of third-party contracts from three to five years. This serves to reduce project contracting cycles, leading to faster oil and gas production and supporting Nigeria’s long-term oil production target of 4 million barrels per day.
According to the report distributed by the APO Group on behalf of African Energy Chamber, Nigeria is also targeting new investments in gas monetization, refining and infrastructure expansion, with a view to boosting gas supplies, raising power access and supporting industrialization. Gas-focused reforms include tax credits for non-associated gas projects and a 25% tax dedication for qualifying plant and equipment used in gas utilization projects, which have directly triggered new investments.
In June 2024, TotalEnergies and the Nigerian National Petroleum Corporation reached a $550 million FID for the development of the Ubeta gas field. Gas from the field will be supplied to the Nigeria LNG liquefaction plant, with first production anticipated for 2027, and supports the country’s transition toward low-cost and low-emission projects.
In the downstream industry, Nigeria has been in the process of deregulating the sector, improving fuel availability and affordability, eliminating government subsidies and improving efficiencies. The long-awaited Dangote Refinery began operations in late-2023, transforming Nigeria into a net exporter of refined petroleum products to Europe, Asia and Africa.
With a capacity of 650,000 barrels per day, the refinery is Africa’s largest and its operational success is crucial for stabilizing domestic fuel prices, reducing import dependency and increasing foreign exchange earnings. Looking ahead, Nigeria’s policy reforms are translating to new investment opportunities in developing domestic refining capacity, petrochemical complexes and distribution infrastructure, as well as natural gas processing and storage facilities as part of the country’s gas monetization drive.
GIK/APA