Nigeria’s total annual upstream capital expenditure dropped by 74% from $27 billion in the year 2014 to less than $6 billion in 2022, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has said.
This, according to the Commission, was because most of the International Oil Companies (IOCs) had deprioritized Nigeria in their portfolios, leading to the redirection of CAPEX to other countries.
The Commission’s Chief Executive, Engr. Gbenga Komolafe made the disclosure at the 2023 Nigerian International Energy Summit held in Abuja.
His words: “Most of the IOCs deprioritized Nigeria in their portfolios leading to the redirection of CAPEX to other countries and the attendant dwindling investment in Nigeria’s upstream sector.”
According to him, the increasing competition from regional peers have led to a decrease in the proportion of the overall upstream investment attracted by Nigeria.
“This under-investment is also reflected in the country rig count,” says Komolafe even as he stressed that on average, Nigeria had 17 active oil rigs in 2019;”representing one of the highest counts on the African continent as at then.”
However, he said the average rig count declined to 11 in 2020, 7 in 2021, 10 in 2022, but recently grew to 24 in April 2023.
He attributed the recent growth in rig count to positive signals of new investments trickling into the country on premise of the Petroleum Industry Act (PIA).
“This is also a reflection of investors’ acceptance of effective implementation of the PIA by the regulator. In contrast, to other OPEC member countries such as Iran, Iraq, Algeria, Libya, Angola,” he said.
He noted that prior to the enactment of the Petroleum Industry Act (2021), investments in the Nigerian oil and gas industry declined due to regulatory uncertainty in addition to de-funding of fossil fuel development occasioned by energy transition and COVID-19.
Komolafe added that although Africa is poised to develop cleaner fossil fuel to offset the deficits in the world energy supply but noted that it requires the right legislative framework and change in policy direction in order to; “design a system that will foster energy sufficiency while simultaneously attending to the urgency of ending carbon emissions.”
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