AEW 2024: Nigeria invites global players to invest in energy industry at Cape Town forum

*Olu Verheijen, Special Adviser to the President on Energy, highlights Nigeria’s untapped potential and recent reforms to global investors at the 2024 African Energy Week, in South Africa, noting the International Oil Companies invested $82 billion in deepwater outside the country since 2013

Isola Moses | ConsumerConnect

The Federal Government of Nigeria has urged global investors to take new opportunities in the country’s energy sector,

Olu Verheijen, Special Adviser to the President on Energy, highlighted these untapped potential and recent reforms to attract capital while speaking at the ongoing African Energy Week (AEW) in Cape Town, South Africa (SA).

Verheijen underscored the such untapped potential within the energy industry, and discussed the recent reforms implemented by the President Bola Tinubu administration to attract investment.

The Presidential aide noted Nigeria has historically underperformed in oil and gas production despite the country’s wealth in the oil and gas industry.

She equally referenced how countries like Brazil that has only 30% of Nigeria’s oil reserves has outperformed by producing 131% over current production of the West African country.

Abiodun Oladunjoye, Director of Information, in the State House, Abuja, FCT, in a statement Thursday, November 7, 2024, noted Verheijen said: “Despite our abundant endowments, we have underperformed against our potential.

“For example, Brazil holds only 30% of Nigeria’s oil reserves but produces 131% more. This is largely due to under-investment.”

According to her, since 2016, Nigeria has attracted only 4% of African oil and gas investments, while investment has surged in other, less resource-rich nations.

“Since 2016, Nigeria has managed to attract only 4 percent of total investments in oil and gas, while less resourced countries in Africa have enjoyed a bigger share. “When we analysed investment data, we also found that, between 2013, when Nigeria’s last deep-water project reached FID, and now, IOCs operating in Nigeria have committed more than $82 billion in deep-water investments in other countries that they have deemed to be more attractive destinations for their capital,” Verheijen also explained.

Recognising this trend, the presidential aide highlighted many efforts by President Tinubu’s administration to enact reforms aimed at reshaping Nigeria’s investment landscape.

She said among these initiatives, the Nigerian Government has introduced fiscal incentives targeting deep offshore and non-associated gas projects.

The Special Adviser to the President on Energy noted all these fiscal incentives marked the first time Nigeria has outlined a fiscal framework specifically for deep-water gas.

In the government’s efforts at enhancing the upstream Oil and Gas sector in the country, Verheijen said her office had collaborated closely with the office of the National Security Adviser (ONSA), to create and distribute focused Security Directives, leveraging insights garnered from on-ground operators.

Additionally, the Presidential aide disclosed steps to streamline approval processes by clearly defining the regulatory scopes involved.

She stated this initiative aims to significantly reduce the extended project timelines that have historically plagued the industry, as well as the high-cost premiums associated with operating in Nigeria.

“Our target is to shorten the contracting timelines from an extensive 38 months to just 135 days, while also working to eliminate the 40% cost premium that currently exists within the Nigerian petroleum industry,” she said.

Besides, she highlighted the President Tinubu administration’s current measures to further open up the oil and gas sector for bigger investments with a set of  clear fiscal incentives for Non-Associated Gas and Deep offshore Oil & Gas exploration and production.

Verheijen further stated: “This is the first time that Nigeria is outlining a fiscal framework for Deepwater gas since exploration in the basin commenced in 1991,” she said.

According to her, among other initiatives, there has been some focus on midstream and downstream investments in Compressed Natural Gas, (CNG), Liquefied Petroleum Gas (LPG), and Electric Vehicles (EVs) as part of the Presidential Gas for Growth Initiative.

The current administration, stated Verheijen, has also worked to streamline regulatory processes, shorten project timelines, and reduce the high-cost premium of operating in Nigeria.

She explained: “We have also introduced fiscal incentives to catalyse investments in the midstream and downstream sectors, including, Compressed Natural Gas (CNG), Liquefied Petroleum Gas (LPG), and Mini Liquefied Natural Gas (LNG).

“These align with the broader Presidential Gas for Growth Initiative, which seeks to enable the displacement of PMS and Diesel in three key sectors: heavy transport, decentralised power generation and cooking.

“These incentives are also stimulating demand for Electric Vehicles.”

In regard to the overall goal the energy initiatives, she said “our goal is to eliminate the 40% cost premium within the Nigerian petroleum industry and cut down contracting timelines from 38 months to 135 days.”

Verheijen further stated the Nigerian Government has unlocked over $1 billion across the energy value chain, with two more major investment projects expected by mid-2025.

She noted: “We are also facilitating the transfer of onshore and shallow water assets to local companies with the capacity to grow production, while supporting the transition of International Oil Companies, with resilient capital, into deep offshore and integrated gas.

“We have unlocked over $1 billion in investments across the value chain and by the middle of 2025 we expect to see FID on two more projects, including a multibillion-dollar deep-water exploration project, which will be the first of its kind in Nigeria in over a decade – one of many to come.

Verheijen also discussed ongoing efforts by the Tinubu administration at revamping the Nigerian power sector, with plans to provide more reliable electricity access for the 86 million Nigerian consumers currently underserved.

The scheme aims to improve revenue assurance and collection, she stated.

The Presidential aide said: “Other key measures include tackling legacy debt, deploying seven million smart meters to reduce losses, and expanding off-grid solutions for remote communities.

“By 2027, Nigeria aims to ensure 20 hours of electricity daily for consumers in urban areas and industrial hubs.”

Highlighting recent macroeconomic reforms, such as petrol subsidy removal and Foreign Exchange (Forex) liberalisation, Verheijen expressed confidence that Nigeria is set for unprecedented growth.

She also said: “Under President Tinubu’s leadership, Nigeria is championing reforms to unlock its vast economic potential and create jobs.

Verheijen, therefore, added by inviting foreign partners to participate in Nigeria’s next chapter of growth in the energy sector of the economy.

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