Nigeria is poised to receive a significant influx of foreign direct investments (FDI) ranging from $18 to $20 billion in its oil sector, as various oil companies show renewed interest in restarting previously abandoned projects and expediting the progress of delayed initiatives. Bala Wunti, the Group General Manager of Nigerian Upstream Investment Services (NUIS), recently shared these insights at an oil conference in Abuja, according to a report by Prensa Latina.
Among the notable projects that have garnered renewed commitments from investors are the Agbami gas project and ExxonMobil’s Owowo field. Prime Minister Wunti emphasized the advancements being made in the Agbami gas project, which is contributing significantly to the inflow of foreign direct investments. Additionally, the unfreezing of the Owowo project, facilitated by the Petroleum Industry Act (PIA) and the removal of the Production Sharing Contract (PSC), is expected to further bolster investments.
Prime Minister Wunti projected that the cumulative foreign direct investment in Nigeria’s oil sector could potentially range between $18 billion and $20 billion over the coming year.
The introduction of the Petroleum Industry Act marked a pivotal development for Nigeria’s oil industry after years of delays. This legislation offers improved regulatory and fiscal terms for oil production arrangements, especially aimed at addressing challenges faced by onshore fields. These challenges include issues like crude theft, sabotage, and community concerns.
The Nigerian National Petroleum Company (NNPC) Limited’s contract extension with international oil company partners for five major oil blocs, which also improved terms for agreements such as the Production Sharing Agreement, has been part of efforts to foster investments. Gbenga Komolafe, CEO of the Nigerian Upstream Regulatory Commission (NUPRC), noted that approximately 20 oil rigs are currently in production.
Komolafe highlighted the NUPRC’s initiatives to introduce new regulations to enhance measurement accuracy in oil production, addressing an issue that has contributed to crude oil losses in the industry. The newly introduced regulations aim to monitor production on a real-time basis to minimize such losses.
Efforts to create an attractive investment climate are aligned with the Nigerian Upstream Regulatory Commission’s approach to encourage investments. Komolafe expressed the commission’s commitment to leverage regulations to create an environment conducive to investments in Nigeria.
However, despite the efforts, challenges remain. Industry operators have emphasized the importance of stability, risk mitigation, funding, ethics, compliance, security, and regulatory clarity for potential investors. Elohor Aiboni, Managing Director of Shell Nigeria Exploration and Production Company Ltd., highlighted the necessity for stability and clarity of rules to attract investors. Roger Brown, MD of Seplat Petroleum Development Company, echoed the sentiment, stressing the importance of consistent and clear regulations for investor confidence.
While renewed investor interest in restarting projects is evident, some projects are still awaiting investment decisions in Nigeria. Projects like the Zabazaba-Etan, Bosi, Satellite Field development phase two, Uge, Nsiko deepwater, and Owowo field developments await crucial investment determinations.
The dynamics of the Nigerian oil sector reflect a multifaceted landscape of efforts to attract foreign direct investments, navigate challenges, and position the industry for sustainable growth.