For the first time in Nigeria’s history, the country’s oil and gas industry did not record any new investment in the second quarter of 2023, a new report published by the National Bureau of Statistics (NBS) has shown.
Data sourced from NBS revealed Nigeria’s oil & gas sector, the lifeblood of Africa’s biggest economy garnered $750, 000 in the first quarter of the year. However, it recorded nothing in the next quarter.
Analysts have said that a conducive environment to do business in the oil and gas sector in Nigeria is not obtainable yet on the back of failed reforms to keep the industry on track, which is leading to underinvestment and divestment.
“Some oil companies are deprioritising Nigerian portfolios either for deeper offshore activities or are moving where the capital can attract more returns,” said Jide Pratt, country manager of Trade Grid.
Read also: Nigeria’s oil sector needs $25bn annual investment, says Avuru
He said that the country’s rig count is undulating on the back of shut-ins from maintenance or reduced yields due to dwindling assets or the general environment being seen as unenabling.
“We must also come to terms that development is also going on in other smaller nations and as such capital finds the best environment.
“We must turn this around with implementation in full of the Petroleum Industry Act (PIA) to ensure an environment that commands investments to increase Oil and gas exploration.
According to him, the President of the country must now appoint a seasoned oil expert to drive the industry as substantive Minister of Petroleum, “else the days ahead could be uncomfortable.”
Investment in the upstream sector declined by 74 percent from $27 billion in 2014 to as low as $6 billion in 2022, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
The NUPRC said increasing competition from regional peers has led to a decrease in the proportion of overall upstream investment attracted by Nigeria.
Read also: Oil sector GDP contribution hits lowest in 8 years
Industry operators have called for robust investments in the sector at different forums to foster its present needs while driving the country’s energy transition plan by 2060.
Nigeria’s oil production has been struggling in recent months, with output falling to 1.2 million barrels of oil daily, far below its 1.8 million bpd quota.
“The Nigerian oil and gas industry requires an annual $25 billion investment in the next 10 years to achieve efficient optimisation of its resources as the world moves towards cleaner energy,” said Austin Avuru, executive chairman and founder of AA Holdings Limited, at the annual conference of the Association of Energy Correspondents of Nigeria in Lagos on Thursday, October 5.
He said that the country needs to reconstruct its energy policy plan and find a way to enhance local production capacity. “This capacity will generate a multiplier effect that can lead to our transition goal.”
Read also: PIA has improved benefits from natural resources to oil communities – S4C
According to the NBS, total capital importation in the second quarter of 2023 fell to $1.03 billion from $1.54 billion in the same period of 2023, indicating a decrease of 32.90 percent.
When compared to the preceding quarter, capital importation fell by 9.04 percent from $1. 13 billion in the first quarter of 2023.
Meanwhile, the manufacturing or production sector recorded the highest foreign investments in the second quarter of 2023.
The report by the country’s Statistics Bureau showed that the sector recorded the most inflow with $605.04 million, representing 58.7 percent of total capital imported in the period, followed by the banking sector, valued at $194.6 million (18.9), and Shares with $68.63 million (6.66 percent).
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