Nigeria’s oil sector Becomes Unsteady amid global clean energy transition

Nigeria’s oil and gas sector faced an unprecedented challenge in Q2 2021, as it failed to win any foreign investments, indicating a substantial shift in global energy trends towards cleaner alternatives.
According to the National Bureau of Statistics (NBS), the Federal Government struggled to convince International Oil Companies (IOCs) to invest in the sector between January and June.
The NBS’s ‘Nigeria Capital Importation Q2’ report found that no foreign capital was put into the oil and gas sector during the period under review.
This trend parallels broader divestment efforts by IOCs, who are progressively diverting their assets into cleaner energy sources and seeking opportunities in neighbouring nations.
Many IOCs have adjusted their strategy in response to global commitments, such as the United Nations’ aim to attain net-zero fossil-fuel emissions by 2050.
As a result, Nigeria’s oil and gas sector, which has historically been a major source of revenue and foreign exchange gains for the government, is now dealing with a drop in foreign investment.
Elliot Ibie, President of the Nigerian Association of Petroleum Explorationists, ascribed the fall in industry investments to a number of variables.
He attributed the fall to the COVID-19 epidemic, security issues, pipeline vandalism, oil theft, and delays in the approval of the Petroleum Industry Act.
“It all started after COVID 19, coupled with security challenges, pipeline vandalism and oil theft and slowness in passage of the Petroleum Industry Act.”
Nigeria had $1.03 billion in capital imports in Q2 2023, a 32.9% reduction from the $1.54 billion recorded in the same period in 2022. This sum was slightly lower than the previous quarter’s total of $1.13 billion.
According to the NBS report, loans accounted for a sizable percentage of foreign inflows in Q2, accounting for 74.9% of total capital imports.
Foreign direct investment (FDI) accounted for $86.03 million, or 8.4% of total foreign inflows, while foreign portfolio investment (FPI) accounted for 10.4%, or $106.85 million.
In Q2, the manufacturing industry drew the highest foreign investment, totaling $605.04 million, followed by the banking sector ($194.58 million) and the stock market ($68.63 million).
Several major oil companies have sold their interests in Nigeria, with Italian giant Eni recently agreeing to sell its Nigerian Agip Oil Company subsidiary to Oando. Divestments by multinational oil corporations in Nigeria have totaled £871 million since 2020, according to Wood Mackenzie, a British research and consulting group.
President Bola Tinubu recently underlined his commitment to luring investments during a meeting with Shell Petroleum Development Company, emphasising, “It’s a promise I made personally to Nigerians. Whatever it takes, I will fulfill that promise to Nigerians.”

Source: allnewsng.com

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