Nigeria, a leading oil-producing nation has struggled to attract the right investments to scale its oil and gas industry, despite having the largest gas reserve base in Africa. This is a major economic challenge, especially as the petroleum sector accounts for about 90% of the nation’s forex earnings and significant contributor to government income though it only contributes about 8% to Nigeria’s GDP.
In 2021, the federal government signed the Petroleum Industry Act into law, designed to revolutionize Nigeria’s oil and gas sector and attract foreign direct investments. Since the enactment, there is still a lull in attracting local and international investments especially due to the perceived fiscal inadequacy and general business cum economic environment instability.
The new administration led by President Bola Ahmed Tinubu and the office of the Special Adviser on Energy Olu Verheijen, who coordinated across multiple agencies and ministries, has been proactive in its efforts to address issues in the sector to make Nigeria competitive and attractive to accelerate investments. President Tinubu announced a series of reforms including three directives to introduce fiscal incentives for oil and gas projects, reduce contracting costs, and promote cost efficiency in local content requirements.
In less than a year, Nigeria has begun to see new investment interests. Nigerian National Petroleum Company Limited (NNPCL) and Total Energies just announced the Final Investment Decision (FID) on the Ubeta project – a 350 million standard cubic feet of gas per day (scfd) initiative. This final investment decision involves a commitment of $550 million to extract 900 billion cubic feet of non-associated natural gas from OML 58, situated approximately 85 kilometers from Port Harcourt in Nigeria’s Niger Delta Region. The TEPNG Joint Venture investment aligns with the recent Presidential Directives which aims to boost Nigeria’s domestic gas supply and economic development. The directives are predicted to attract new investments and receive dormant projects with over $10 billion worth of projects over the next 18 months.
The Ubeta project with its capacity will serve Nigeria’s domestic market and augment supply to NLNG. This project signifies a major step in advancing energy security, a cornerstone of the federal government of Nigeria’s plans to achieve sustained economic development through improved local gas utilization. The project is also expected to relaunch economic activity and job creation in the sector, as well as stimulate activity in ancillary SMEs within local communities. With this announcement, the administration’s intent to strengthen the PIA with new directives is boosting Nigeria’s attractiveness to investments in the oil and gas industry. The TEPNG JV appears to be the first step to improve gas supply capability, including domestic gas, and economic development by extension.
