Update Post: November 28, 2023 9:58 am
The Nigerian Government revealed that the total annual upstream capital expenditure in Nigeria’s oil and gas industry decreased from 27 billion dollars in 2014 to less than six billion dollars in 2022.
This was disclosed by Mr Gbenga Komolafe Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) at the World Petroleum Congress (WPC) in Calgary, Canada.
The Oil chief, represented by the Executive Commissioner, Mr. Kelechi Ofoegbu, said this represents a 74% decrease in its capital expenditure (CAPEX), blaming the decline in CAPEX on several factors, and urged that regulatory uncertainty significantly impacted investment in Nigeria’s oil and gas industry in a presentation titled “Nigeria and Canada: Collaborating to Decarbonise Nigeria’s Oil and Gas Sector”.
Komolafe revealed that years preceding the enactment of the Petroleum Industry Act (PIA) affected investment in the industry, including the factors are de-funding of fossil fuel development globally.
The statement revealed by the FG stated that he said most International Oil Companies (IOCs) deprioritized Nigeria in their portfolios which led to the redirection of CAPEX to other countries.
- ‘‘This under-investment impacted negatively on the country’s rig count. On average, Nigeria had seventeen (17) active oil rigs in 2019 representing one of the highest counts in the African continent as of then.
- “The average rig count declined to eleven in 2020, seven in 2021, 10 in 2022, but recently grew to as high as 31 by August 2023, a positive signal of new investments trickling into the country.
- “The relatively high crude oil prices may have also attributed to the increase in activities in the petroleum upstream sector.
- “We also see this as a reflection of investors’ acceptance of the PIA and its effective implementation by the regulator.
- “The projected outlook over the next few years looks promising, and as the regulator in the oil and gas upstream sector.
He added that FG plans to leverage this opportunity by doing all that is necessary to attract more investments and revamp the Nigerian upstream sector.
He added that the Petroleum Industry Act has repositioned the Nigerian petroleum sector by creating efficient and effective governing institutions, with clear and separate roles for the industry, and also for enabling transparency, accountability, and fostering a business environment conducive to petroleum operations.
He said since the PIA was brought into law, the Commission developed 24 priority regulations that would create a predictable regulatory environment for operators and other stakeholders, adding:
- ‘‘With Nigeria’s huge gas reserves of 208.83 TCF and a potential for an increase to about 220 TCF within the next ten (10) years, Nigeria has adopted natural gas as our transition fuel in our stride at developing cleaner fuels and staying on track with our net zero emission commitment of 2050.
- “Unfolding event has equally shown that natural gas is our destination fuel, with a projection that gas will form a significant part of the energy mix for Nigeria by the year 2030 and beyond.
- “In recognition of this, the Government has designed the Decade of Gas program to ensure that gas plays a role in lifting us from the challenges that confront us to drive industrial development,’’.