Nigeria now accounts for 40% of Africa’s upstream final investment decisions, up from 4% two years ago. The increase follows energy sector reforms that restored investor confidence, according to a government-backed review.
The report, Nigeria’s Energy Sector Reforms 2023–2026: A Three-Year Review, was led by Olu Verheijen, Special Adviser to the President on Energy. It attributes the turnaround to regulatory, fiscal, and operational changes under President Bola Tinubu, which ended a decade of stagnation in upstream investment.
Reforms cut through years of stagnation
From 2014 to 2023, Nigeria lagged behind peers despite holding 37.5 billion barrels of proven oil reserves—the second-largest in Africa. Algeria captured 44% of the continent’s upstream FIDs during that period, while Angola secured 26%. Nigeria trailed behind Mozambique, Ghana, Senegal, and Namibia.
Production also fell sharply. In the third quarter of 2022, crude output dropped below one million barrels per day due to underinvestment, pipeline vandalism, and regulatory uncertainty.
The recovery began with measures aimed at improving fiscal competitiveness and regulatory clarity. In 2023, the government clarified the roles of the Nigerian Upstream Petroleum Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority, ending long-standing jurisdictional disputes that had delayed project approvals.
Additional steps included tax incentives for upstream projects, a 2024 offshore tax framework, and the Upstream Cost Efficiency Order 2025. Contracting timelines at the state-owned Nigerian National Petroleum Company Limited were reduced from 36 months to a maximum of six.
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These changes aligned with divestments by international oil companies. Shell, ExxonMobil, Agip, and Equinor sold onshore and shallow-water assets to local operators, including Renaissance Africa Energy, Seplat Energy, Oando, and Chappal. The four deals totaled roughly $4 billion and boosted production by 400,000 barrels per day between 2023 and 2025, reaching 1.6 million barrels per day—the highest onshore output in 20 years.
Major projects move forward after years of delay
The reforms unlocked billions in new investment. Shell approved the $5 billion Bonga North deepwater project in December 2024 and committed another $2 billion to the HI Non-Associated Gas project. TotalEnergies and NNPCL greenlit the $550 million Ubeta gas field development in June 2024. These projects represent over $10 billion in signed commitments after nearly a decade of limited upstream activity.
Export gas utilization rose by 39% during the same period, while domestic gas use climbed by 7%. Sustaining the recovery will depend on whether institutional reforms remain in place and whether deepwater projects stay on schedule.
The country’s project pipeline now extends beyond 2026 and is valued at approximately $50 billion. This marks one of its strongest periods for upstream investment in over a decade. The real test will be execution—whether the reforms hold and whether the approved projects deliver as planned.
The numbers indicate a rare improvement in a sector that had spent years in decline. The challenge will be maintaining momentum beyond the current administration’s term.
