A growing number of experts are predicting sunny weather for Nigeria’s oil & gas sector driven by an enabling policy environment and improving fossil fuel prices. This is in sharp contrast to the mood in 2020.
A year ago, COVID-19 had a significant impact on global energy demand leading to a drop in prices. In April, 2020, Bonny Light, Nigeria’s light-sweet crude oil export, fell as low as US$12 per barrel. The ripple effects of the price tumble included a recession in the fourth quarter. Today, it hovers around $68.
According to a forecast by Mordor Intelligence, a global market research and advisory firm, the Nigerian oil and gas market is expected to grow at a compound annual growth rate (CAGR) of more than 2 per cent between 2021 and 2026.
Operators and policy-makers took the sharp drop in demand as a long overdue signal to quicken business model restructurings and reforms. The sector is in stronger health today because of the rejig that the sector was forced into.
So far this year, Nigeria’s offshore oil and gas industry has seen the return of buds of optimism driven by the FG’s efforts to improve infrastructure and encourage private sector investment. The recently passed Petroleum Industry Bill (PIB) is expected to attract the desired investments.
Reforms at the Nigerian National Petroleum Corporation (NNPC), the national oil company, will see it transform into a commercially oriented, profit-driven company that can stand shoulder to shoulder with its peers like Saudi Aramco of Saudi Arabia, and Petronas of Malaysia.
Notably, on the gas front, ANOH Gas Processing Company (AGPC), a subsidiary of Seplat Petroleum Development Company (SPDC), an upstream player, went into partnership with NNPC for a multi-billion-naira gas project set to transform Nigeria’s energy landscape.
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On the deal front, AA & R Investment Group, owned by Abdullahi Haske, one of the industry’s most daring Young Turks, Kaztec Engineering Limited and Salvic Petroleum Resources Limited jointly won a bid to purchase undeveloped blocs located on OML 123, 124, 126, and 137, which were previously owned by Addax Petroleum.
In line with its energy transition agenda across the globe, Shell, the Dutch giant, announced divestment plans for its onshore assets in the Niger Delta. In Nigeria, some oil majors unveil their divestment plans. This does not affect its continued ownership of offshore assets. Indeed, Shell has reassured stakeholders that it will continue to maintain its strong presence in Nigeria and remain a leading partner in Nigeria’s economic growth story.
Rising gender representation has also raised hopes that the once male-dominated sector is adjusting to the times. On August 1, 2021, Elohor Aiboni, a chemical engineer and one-time asset manager of Bonga FPSO, was named the managing director of Shell Nigeria Exploration and Production Company Limited (SNEPCo). She is the first woman to hold this position in the company’s six-decade history in Nigeria.
She joins a still short but growing list of women in the upper echelons of the sector. They include Amy Jadesimi, managing director of LADOL, Folorunsho Alakija, vice-chairman, Famfa Oil Limited, Audrey Joe-Ezigbo, Co-Founder and Deputy Managing Director, Falcon Corporation Limited; and Catherine Uju Ifejika, CEO, Brittania-U Nigeria Limited (BUNL).
Another glimmer came from the Nigeria LNG Limited, which at a ground-breaking ceremony in June, announced the commencement of construction of Train 8. The US$10 billion project is expected to add around 8 million tonnes a year of liquefied natural gas to NLNG, taking the total to around 30 million tonnes per year, an increase of 35 per cent from current production. It will also generate 12,000 jobs.
This month, the federal government of Nigeria began the implementation of CBN’s N250 billion Gas Expansion Fund for the National Gas Expansion Programme (NGEP). The fund is targeted at making finance accessible to this critical sector, motivating investment within the gas value chain and boosting gas usage in the country. It is projected that it would create up to three million direct and indirect jobs.
As the dynamics in the industry continue to edge northwards, BusinessDay Media Limited, West Africa’s foremost economic, financial and economic intelligence provider will host the 3rd annual edition of its Oil & Gas Awards to recognise the innovators, game changers and future-focused projects, that are driving change across the oil and gas value chain. The awards ceremony will hold in Abuja on September 2, 2021.
