…Says IOCs invested $82 billion in deepwater outside Nigeria since 2013

The Special Adviser to the President on Energy, Olu Verheijen has urged investors to seize new opportunities in Nigeria’s energy sector, highlighting untapped potential and recent reforms to attract capital.

Speaking to a diverse audience, at the ongoing African Energy Week in Cape Town, South Africa, she underscored the untapped potential within the industry and discussed the recent reforms implemented by the President Bola Tinubu administration to attract investment.

Verheijen noted that the country has historically underperformed in oil and gas production despite Nigeria’s wealth in the oil and gas industry.

She referenced how countries like Brazil that has only 30% of Nigeria’s oil reserves has outperformed by producing 131% more than current production of Nigeria.

“Despite our abundant endowments, we have underperformed against our potential. For example, Brazil holds only 30% of Nigeria’s oil reserves but produces 131% more.

This is largely due to under-investment,” she said. She said that since 2016, Nigeria has attracted only 4% of African oil and gas investments, while investment has surged in other, less resource-rich nations.

“Since 2016, Nigeria has managed to attract only 4 percent of total investments in oil and gas, while less resourced countries in Africa have enjoyed a bigger share.

When we analyzed investment data, we also found that, between 2013, when Nigeria’s last deepwater project reached FID, and now, IOCs operating in Nigeria have committed more than $82 billion in deepwater investments in other countries that they have deemed to be more attractive destinations for their capital.”

Recognizing this trend, the presidential aide highlighted many efforts by President Tinubu’s administration to enact reforms aimed at reshaping Nigeria’s investment landscape.

Among these initiatives, she said the government has introduced fiscal incentives targeting deep offshore and non-associated gas projects, marking the first time Nigeria has outlined a fiscal framework specifically for deepwater gas.

In efforts to enhance the upstream Oil and Gas sector, she said her office has collaborated closely with the office of the National Security Adviser to create and distribute focused Security Directives, leveraging insights garnered from on-ground operators.

Additionally, Verheijen revealed steps to streamline approval processes by clearly defining the regulatory scopes involved.

This initiative, she said, aims to significantly reduce the extended project timelines that have historically plagued the industry, as well as the high-cost premiums associated with operating in Nigeria.

She added, “Our target is to shorten the contracting timelines from an extensive 38 months to just 135 days, while also working to eliminate the 40% cost premium that currently exists within the Nigerian petroleum industry.

The presidential aide also revealed efforts by the current President Tinubu administration to further open up the oil and gas sector for bigger investments with a set of clear fiscal incentives for Non-Associated Gas and Deep offshore Oil & Gas exploration and production.

“This is the first time that Nigeria is outlining a fiscal framework for Deepwater gas since exploration in the basin commenced in 1991,” She said.

According to her, amongst other initiatives, there has been a focus on midstream and downstream investments in Compressed Natural Gas, (CNG), liquefied petroleum gas, and electric vehicles as part of the Presidential Gas for Growth Initiative.

She added that the administration has also worked to streamline regulatory processes, shorten project timelines, and reduce the high-cost premium of operating in Nigeria.

“We have also introduced fiscal incentives to catalyze investments in the midstream and downstream sectors, including, Compressed Natural Gas (CNG), Liquefied Petroleum Gas (LPG), and Mini Liquefied Natural Gas (LNG).

“These align with the broader Presidential Gas for Growth Initiative, which seeks to enable the displacement of PMS and Diesel in three key sectors: heavy transport, decentralised power generation and cooking.

These incentives are also stimulating demand for Electric Vehicles. “Our goal is to eliminate the 40% cost premium within the Nigerian petroleum industry and cut down contracting timelines from 38 months to 135 days,” Verheijen stated.

She said the government has unlocked over $1 billion across the energy value chain, with two more major investment projects expected by mid-2025.

“We are also facilitating the transfer of onshore and shallow water assets to local companies with the capacity to grow production, while supporting the transition of International Oil Companies, with resilient capital, into deep offshore and integrated gas.

We have unlocked over $1 billion in investments across the value chain and by the middle of 2025 we expect to see FID on two more projects, including a multibillion-dollar deepwater exploration project, which will be the first of its kind in Nigeria in over a decade – one of many to come.

Verheijen also addressed efforts by the Tinubu administration to revamp the nation’s power sector, with plans to provide more reliable electricity access for the 86 million Nigerians currently underserved.

She said the scheme aims to improve revenue assurance and collection. Other key measures include tackling legacy debt, deploying seven million smart meters to reduce losses, and expanding off-grid solutions for remote communities.

By 2027, Nigeria aims to ensure 20 hours of electricity daily for consumers in urban areas and industrial hubs.

Highlighting recent macroeconomic reforms such as petrol subsidy removal and foreign exchange liberalization, Verheijen expressed confidence that Nigeria is set for unprecedented growth.

“Under President Tinubu’s leadership, Nigeria is championing reforms to unlock its vast economic potential and create jobs,” she concluded, inviting foreign partners to participate in Nigeria’s next chapter of growth.

Abiodun OladunjoyeDirector of Information State House, AbujaNovember 7, 2024