The federal government at the weekend remained upbeat about the fresh upward trajectory of the country’s oil and gas sector, disclosing that an additional $2 billion in new investments would be expected by the end of the first quarter of 2025, a few months after Shell commenced development of the $5 billion Bonga North deepwater project.
This is just as the federal government planned to restructure its huge yearly subsidy payment on electricity to ensure fairness, as much of the subsidy under the current structure benefits the wealthiest 25% rather than low-income households.
The federal government had stated that Nigeria had not recorded significant investment in the deepwater terrain since TotalEnergies’ Egina project launched in 2013, noting however, that President Bola Tinubu’s issuance of Executive Orders 40, 41 and 42 in February 2024 marked a turning point.
Special Adviser on Energy to the president, Olu Verheijen, in an interview with Energy Year, an energy intelligence platform on emerging markets, stated that Tinubu’s administration has significantly reduced time-to-market project execution timelines, production costs and also enhanced fiscal competitiveness of projects.
The $2 billion expected investments will add to TotalEnergies’ $550 million investment in the Ubeta gas field as well as Shell’s $5 billion Bonga North project.
Verheijen, who revealed the $2 billion investments, noted that the Bonga North milestone was significant not only for its scale but also for its 350 million barrels of estimated crude reserves, which will enhance Nigeria’s oil production, revenue, and standing as Africa’s leading producer.
The presidential aide said that to attract investment, Nigeria was benchmarked against 13 other countries where International Oil Companies (IOCs) actively invest, with Nigeria ranking ninth in investment attractiveness.
To secure capital inflows, she explained that Nigeria needed to move into the top three as shown by thorough research done by the federal government’s team.
“This is just the beginning. We anticipate further major investments from IOCs and other stakeholders in deep offshore and gas. With the implementation of recent reforms, Nigeria has repositioned itself among the top three most attractive deepwater investment destinations.
“By the end of Q1, 2025, we aim to unlock $2 billion in new investments, closely monitoring key projects while creating favourable conditions for long-stalled developments, such as Eni’s Zabazaba project, to progress once legal issues are resolved.
“By the end of President Tinubu’s first term in 2027, Nigeria’s upstream sector will operate under a clear and stable regulatory framework. In the downstream, its full potential will be realised, with the Dangote Refinery operational, state-owned refineries in Port Harcourt and Warri undergoing rehabilitation, and modular refineries emerging across the Niger Delta, fostering a dynamic downstream ecosystem,” she said.
Beyond fiscal and regulatory adjustments, coordination and transparency among policymakers, industry stakeholders, and government agencies, she said, would remain paramount.
“A case in point is the drill-or-drop principle already embedded in the Petroleum Industry Act (PIA), with regulatory bodies considering its enforcement. However, enforcing such measures without first creating a competitive investment climate would be counterproductive.
“The priority must be to establish the right conditions for investment. Only then does it become justifiable to impose compliance mechanisms,” Verheijen added.
On the midstream sub-sector, the special adviser noted that targeted incentives for non-associated gas have enhanced the supply reliability for Nigeria LNG, reinforcing Nigeria’s top-10 global LNG export capacity and driving power-sector growth, industrialisation, and economic diversification.
With 80 per cent of Nigeria’s on-grid electricity powered by gas, she said that the aims of the government are securing investments to meet domestic energy needs while expanding exports.
At the same time, Verheijen explained that ongoing IOC divestments were reshaping the industry, creating a new class of onshore investors acquiring their assets and ensuring they have the requisite technical and financial capacity to deliver Nigeria’s near-term production targets.
“These indigenous firms are poised to play a pivotal role in the sector’s future. By securing substantial dollar-denominated financing, their production, whether oil or gas, is expected to contribute significantly to foreign exchange earnings. Additionally, their domestic investments will bolster Nigeria’s energy security and improve the national trade balance.
“As these companies expand their presence in Nigeria’s oil and gas value chain, their products will drive local currency earnings, reducing the reliance on imports. The monetisation of natural gas, including Compressed Natural Gas (CNG) and petrochemicals, will enable domestic sales in naira, thereby curbing demand for imported commodities, such as fertilisers and automotive gas oil.
“This strategic shift will not only strengthen the energy sector but also foster a positive trade balance, enhancing Nigeria’s economic resilience,” she added.
In the power sector, she stated that the Tinubu administration was set to restructure its huge yearly subsidy payment on electricity to ensure fairness, explaining that as it stands currently, much of the subsidy benefits the wealthiest 25 per cent rather than low-income households.
Under the Presidential Metering Initiative (PMI), the special adviser stated that the federal government aims to deploy 5 million meters and associated infrastructure to eliminate estimated billing, close the metering gap, and enhance revenue collection.
By reducing losses and improving financial stability, the initiative, she said, will enable distribution companies to reinvest in infrastructure upgrades, ultimately improving power supply reliability.
“The second is clearing legacy debt to restore financial stability. The government is addressing outstanding debts owed to power-sector stakeholders, which have hindered investment and weakened liquidity. By resolving these financial obligations, power companies will regain the capacity to upgrade infrastructure, ensuring a more stable electricity supply.
“The third is transitioning to affordable and cost-reflective tariffs. Currently, the government spends… annually on electricity subsidies, much of which benefits the wealthiest 25% rather than low-income households.
“To ensure fairer pricing, the government is restructuring subsidies, introducing a targeted subsidy framework that prioritises vulnerable consumers while allowing market-driven tariffs for others.
“These initiatives aim to improve financial liquidity across the power sector, allowing companies to modernise the grid and expand access. Abundant and reliable electricity supply will enable factories, industrial clusters, and manufacturers to scale operations, enhance productivity, and drive economic expansion,” she added.
