While Nigeria grapples with persistent security challenges and policy uncertainties, its neighbour Angola is experiencing a surge in foreign investment.
The Southern African nation is poised to attract a staggering $60 billion over the next five years, primarily directed towards its burgeoning oil and gas sector.
This influx of capital is a testament to Angola’s concerted efforts to create a favorable investment climate.
Read also: Nigeria oil sector choked by bureaucracy
The government has implemented a series of reforms, including streamlining regulatory processes and offering attractive fiscal incentives, to lure international oil companies.
The first multi-year auction for 50 onshore and offshore blocks was for 2019-2025, as Angola strives to arrest a steep decline in crude oil production from mature oilfields.
“We have already started to work on a plan for after 2025 and are currently executing our exploration strategy which is the evaluation of different sedimentary basins of the country,” Alcides Andrade, a board member at Angola’s National Agency of Petroleum, Gas and Biofuels (ANPG) said.
“It is an aggressive approach we believe we need to have,” he said, adding it was unclear at this stage how many blocks in total would be up for grabs.
Production in Africa’s second largest crude oil producer after Nigeria has stabilised at just over 1.1 million barrels a day (bpd) after reaching a peak of around 2 million bpd in 2008.
Andrade, speaking on the sidelines of an energy conference in Cape Town, said during the first four licensing rounds in the multi-year strategy, 35 concessions have been awarded thus far.
“The plan is by the end of this year to be close to 41 concessions and then next year to 50,” he said.
ANPG estimates more than $60 billion of new investment will flow over the next five years in currently producing concessions, besides “tens of billions” more from new license holders in the future, Andrade said.
Oil is the lifeblood of Africa’s biggest economy. It provides roughly half of government revenues and nearly all of its foreign exchange receipts as well as a big part of its presence on the global stage.
Read also: Global oil traders Vitol, Trafigura lead buyers as Dangote’s mega oil refinery fires up
But it has also been underutilised as a resource for Nigeria’s 200 million people in the 64 years of its discovery due to bureaucratic bottlenecks, contracting delays, and low local participation since Royal Dutch Shell first tapped a well in the swamps of the Niger Delta.
“Nigeria loves to open topics without closing them. You love to debate. There is always a new legislature in Nigeria about a new petroleum law. When you have such permanent debates, it’s difficult for investors looking for long-term structure to know what direction to go,” Patrick Pouyanne, chief executive officer of TotalEnergies said.
Pouyanne, who spoke with panellists at the Africa CEO Forum in Kigali, Rwanda, said the inconsistency in policy making decisions led to the diversion of the project from Nigeria to Angola, a country with a more stable policy framework.
“We have countries that have perfectly integrated policies like Angola. So, we went to Angola and announced a very large $6 billion project at the beginning of the week because their framework is stable. So we know where we go,” Pouyanne said.
Security concerns in the Niger Delta, the heart of Nigeria’s oil industry, have long been a deterrent for investors, according to experts surveyed by BusinessDay.
Early this month, the Nigerian government began processes for the 2024 oil bid round but perennial concerns around a forced merger of bidders, allegations of favouritism and high signature bonuses could mar the process.
Read also: Turn your oil into treasures: A path to lasting wealth
12 oil blocks and five deep offshore assets from last year’s bid exercise are on the line.
BusinessDay’s findings showed out of the over 60 companies that got approvals in the last marginal bid round, only about five have started production.
“Nigeria can’t afford to be complacent,” says Folabi Ogunrinola, an energy analyst based in Lagos. “Angola has made a very compelling case to investors, and Nigeria needs to address the challenges that have made it a less attractive option in recent years.”
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
