Nigeria’s oil and gas industry, once a pivotal pillar of the economy, is currently confronting formidable challenges. Despite the recent recovery in global oil prices, the sector continues to struggle with chronic underperformance. Rampant oil theft, vandalism, and persistent insecurity have significantly impeded production, preventing Nigeria from achieving its OPEC quotas or budgetary targets. As a result, upstream investment has sharply declined, with companies redirecting capital to more stable regions. Between 2014 and 2022, Nigeria’s upstream capital expenditure plummeted from $27 billion to $6 billion. The country attracted a mere 5% of Africa’s gas investments, despite holding 33% of the continent’s reserves.
However, recent reforms, including executive orders designed to stimulate investment and the launch of the Dangote Refinery, present potential growth opportunities. Although a modest increase in revenue for service companies is anticipated, profitability remains under pressure due to escalating operational costs and fierce competition. To fully realize the sector’s potential, effective management and strategic oversight will be essential.
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