Oil, gas sector seen attracting new investments in 2025

Oil and gas investments may attract more investments in 2025, according to experts.

Foreign Direct Investments (FDIs) into Nigeria rose by 248 percent in the third quarter of 2024 to $103.82 million, but this still remains too low to engender growth needed to turnaround the investment-starved economy.

FDI, which consists of equity and capital needed for long term economic development, declined to its lowest on record in the second quarter (Q2) to $29.8 million, up from $119 million in the first three months of the year.

But the unexpected increase seen in Q3 was attributed to the reforms implemented in the energy sector by President Bola Tinubu, which have since paved the way for more investments, according to Adeola Adenikinju, president of the Nigerian Economic Society (NES).

“The FDI will be coming from the energy sector, the petroleum, the oil and gas sector because of the reforms that the president announced or implemented in the energy sector. I think more investment will come to that sector,” Adenikinju told our correspondent.

He noted that the relative peace the oil-rich Niger Delta is witnessing, together with the full liberalisation of the oil sector, would likely lure more investors and may lead to a sustained growth in direct investment.

“I expect that more investment will flow towards gas, to the refinery sector. So, that sector is likely to be very bullish in the future, very likely to grow,” the economics professor said.

Earlier this year, TotalEnergies had pledged around $500 million to a joint venture with the state-owned Nigerian National Petroleum Company (NNPC) Limited to develop the Ubeta onshore field. With an expected output of 300 million cubic feet per day, this project is set to strengthen the gas supply to the Nigerian Liquefied Natural Gas (NLNG) plant.

Since taking office in May 2023, President Bola Tinubu has been addressing issues in the oil and gas sector, signing two executive orders this year to improve efficiency. Nigeria is seeking to attract up to $10 billion in new investments for deep-water gas exploration through tax incentives and other measures outlined in a new policy framework.

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Samson Simon, CEO/chief economist at ARKK Economics and Data Limited, an Abuja based data-solution firm, explained that growth in FDI demonstrates investor confidence in an economy but said the recent report is “not good enough.”

“A country of over 200 million people attracting a little over $100 million in a quarter is not an impressive performance,” Simon said, noting that the rise means investors are beginning to see changes in the Nigerian economy.

A further analysis of the capital importation report by the National Bureau of Statistics (NBS) revealed that of the total FDI recorded in the period under review, equity took the lion share of $97.12 million while capital managed a paltry $6.71 million.

While portfolio investment saw a dip, falling to $899 million up from $1.4 billion, FDI contributed a paltry 8.29 percent of total capital importation in Q3.

Muda Yusuf, the CEO of Centre for the Promotion of Private Enterprise (CPPE), a Lagos-based private sector-led organisation, decried the low level of FDI in a country that houses more than 200 million people, describing it as “small.”