FDI’s Impact on Nigeria’s Oil Sector
Investment Strategies for Nigeria’s Energy Future
Strengthening Nigeria’s Oil Industry Through FDI
BY SHEKWOPEYELO
At the Kenna Partners Energy Dialogue in Lagos, stakeholders agreed that boosting investments is essential for Nigeria’s oil and gas industry growth. Themed “Divestments, Re-Investments, Deep-Offshore Development and the Future of Oil and Gas in Nigeria,” the event brought together key players to discuss sector challenges and future strategies.
Kamoru Busari, Director of Upstream at the Ministry of Petroleum Resources, represented Honourable Minister of State for Petroleum Resources, Senator Heineken Lokpobiri. He highlighted the ministry’s efforts to attract investments amid global energy transition challenges. “We started dialogues with other oil-producing African nations to create a bank for funding our projects. This led to the $5 billion African Energy Bank, now hosted by Nigeria,” Busari stated.
Victor Otobo, head of the National Oil and Gas Excellence Centre, underscored the NUPRC’s commitment to fostering divestment and re-investment. He explained the divestment process. Companies must notify the NUPRC and submit a divestment application. The commission then conducts due diligence to ensure asset clarity before Ministerial Consent.
Otobo also pointed out the challenges new assignees face after obtaining Ministerial Consent. To address these, the NUPRC has established Alternative Dispute Resolution Centres in Lagos and Yenegoa. These centers help resolve disputes swiftly. Despite granting 42 deep offshore development licenses over 30 years, only six have been developed due to funding and technology constraints.
To encourage investments, the NUPRC has streamlined taxes. They removed bottlenecks in the system. Otobo noted that the Petroleum Industry Act simplified the tax regime, reducing the overall burden on operators.
Professor Fabian Ajogwu, Senior Partner at Kenna Partners, urged a deeper look into the energy sector. IOCs are divesting in Nigeria while re-investing in other African countries. He identified security challenges and community issues as key factors driving divestments. “Indigenous operators must acquire these assets and develop strategies to address these challenges,” he advised.
Ajogwu emphasized that new assignees need to engage effectively with host communities. They must operate under lean models and address security issues. He concluded that while operators should focus on maintenance and governance, opportunities from IOCs’ re-investments in untapped deep offshore potential can help mitigate divestment impacts.
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