The recent announcements by Nigeria’s upstream petroleum regulator, the NUPRC, should have inspired confidence in the future of the country’s oil and gas sector. Regulatory approval for four pending transactions, along with an ambitious target of adding one million barrels of oil per day, initially seemed to mark a step forward. Yet, these actions have been overshadowed by long-standing regulatory challenges and delayed approvals that threaten the sector’s—and indeed, the country’s—prospects for economic revival.
The Honourable Minister of State for Petroleum Resources articulated a sentiment that many in the industry have long held. He questioned the pace and ambition of the NUPRC’s one million barrels per day target, urging more aggressive timelines to match Nigeria’s pressing economic needs. His critique, far from unwarranted, underscores a growing perception that Nigeria’s regulatory landscape is riddled with bottlenecks. What could be a dynamic, responsive system for approving oil transactions has instead become synonymous with delays that stifle investment.
One high-profile example is the stalled Shell/Renaissance transaction, a deal that has faced an unusually protracted approval process spanning over two years. The NUPRC’s lack of clarity on this decision has compounded industry concerns. The delay of “willing seller, willing buyer” transactions without clear justification raises fundamental questions about the transparency and predictability of regulatory oversight. For Nigeria—a country urgently seeking to attract foreign investment and increase oil output—the current approach is economically unsustainable.
These regulatory delays are not without consequence. Nigeria’s Coordinating Minister of the Economy has made repeated assurances to the global investor community, stressing the country’s openness to business and the crucial role of increased oil production in the nation’s economic recovery. Yet such assurances are often overshadowed by regulatory inconsistencies. Nigeria’s investment inflows, which peaked at $24 billion five years ago, have now dwindled to $3.9 billion in 2023—a stark indicator of eroding investor confidence.
Read also: Drowning in oil: How bureaucracy is crippling Nigeria’s economic engine
The country’s largest refinery, Dangote’s $20 billion facility, also highlights regulatory challenges. Although it represents a rare case of domestic industrial expansion, regulators initially questioned the facility’s readiness and product quality, despite its crucial role in reducing Nigeria’s reliance on imported petroleum products. This incident exposes a broader issue: rather than facilitating growth, regulatory bodies often seem to obstruct progress, diminishing Nigeria’s appeal as a viable investment destination.
The oil sector, which contributes 90 percent of Nigeria’s foreign exchange revenues, remains the bedrock of the economy. But regulatory delays, lack of transparency, and uncompetitive practices hinder its growth. As investors grapple with a plunging naira, 32 percent inflation, and escalating food insecurity, Nigeria’s current approach is increasingly untenable. A sector with such profound economic importance demands a regulatory framework that prioritises efficiency, transparency, and strategic foresight.
In the short term, Nigeria would benefit from an independent audit of the NUPRC’s processes to identify and rectify bottlenecks. This must be accompanied by regulatory reforms that streamline approval processes, enhance transparency, and strengthen the overall ease of doing business. Nigeria’s oil and gas sector has immense potential, but unlocking it requires decisive action.
If the government genuinely seeks economic revitalisation, it must support an environment in which strategic investments can flourish. By streamlining regulatory processes, enhancing transparency, and fostering a predictable business climate, Nigeria can position itself as a premier destination for energy investment in Africa. Without a recalibration of its regulatory practices, Nigeria risks further economic stagnation at a time when global interest in African energy is high.
A robust, clear-sighted regulatory approach would not only attract critical investments but could also catalyse domestic economic growth, create jobs, and improve the lives of millions of Nigerians. By embracing a forward-thinking regulatory framework, Nigeria can unlock the full potential of its oil and gas sector and secure a prosperous future for generations to come. The stakes are high, and the time for action is now.
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