“In the years preceding the enactment of the PIA, investments in the Nigerian oil and gas industry declined mostly due to regulatory uncertainty,” said Komolafe.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Wednesday, urged operators in the African oil and gas business space to take advantage of the new regulatory and commercial environment in Nigeria to halt the projected 3.1 billion cubic feet per day gas deficit by 2030.

Speaking in Cape Town, South Africa, at the Africa Oil Week, the Chief Executive Officer of the NUPRC, Mr Gbenga Komolafe, stated that opportunities therefore exist for both existing investors and new entrants in the Nigerian upstream gas sector.

Komolafe, who presented a paper with theme: “Energy Transition Regime: Leveraging Investment Opportunities in the Nigerian Upstream Petroleum Sector,” highlighted the ‘generous’ fiscal incentives in the Petroleum Industry Act (PIA), calling on interested investors to leverage on the law to do business with Nigeria.

The commission’s chief executive pointed out that Nigeria was suitably positioned to become a superpower in the unfolding energy transition, given its population of over 200 million people and abundant energy sources to achieve the right energy mix.

As a country, Komolafe explained that Nigeria boasts of 36.966 billion barrels of oil which ranks her second in Africa, eigth in the Organisation of Petroleum Exporting Countries (OPEC) and 11th in the world.

He added that the country was also richly endowed with 208.83 Trillion Cubic Feet (TCF) of natural gas reserves with upside potential estimated at 600 TCF.

Aside the hydrocarbon potential, Nigeria, Komolafe said, was blessed with potential for green and blue hydrogen, solar, wind, biomass and other sources of renewable energy to leverage the right energy mix in the energy transition regime.

Besides, he explained that other critical minerals such as lithium, manganese, copper, graphite and nickel for development of clean energy technologies also exist in the country.

He quoted the Solid Minerals Development Fund as having recently declared that Nigeria’s mining sector boasts 44 different types of commercially viable minerals worth an estimated $700 billion.

However, he reiterated that the progress towards fully harnessing the country’s resources had been hobbled by certain factors in the past, including an inclement fiscal regime before the advent of the PIA.

“Unfortunately, in the years preceding the enactment of the PIA (2021), investments in the Nigerian oil and gas industry declined mostly due to regulatory uncertainty, de-funding of fossil fuel development occasioned by energy transition and the global call for decarbonisation.

“Most IOCs deprioritised Nigeria in their portfolios leading to the redirection of Capex to other countries with attendant dwindling investment in Nigeria’s upstream sector.

“This led to a decrease in the total annual upstream capital expenditure from $27 billion in the year 2014 to less than $6 billion in 2022, representing a 74 per cent decrease in Capex. Additionally, increasing competition from regional peers also led to a decrease in the proportion of the overall upstream investment attracted to Nigeria.
“This under-investment impacted negatively on the country’s rig count. On average, Nigeria had 17 active oil rigs in 2019, representing one of the highest counts in the African continent as of then.

“The average rig count declined to 11 in 2020, seven in 2021, and 10 in 2022, but recently grew to as high as 31 by August 2023, a positive signal of new investments trickling into the country,” he noted.

Although the relatively high crude oil prices may have contributed to the increase in activities in the petroleum upstream sector, Komolafe stressed that the development was also a reflection of investors’ acceptance of the PIA and its effective implementation by the commission.

“Unfolding events have equally shown that natural gas is our destination fuel, with a projection that gas will form a significant part of the energy mix for Nigeria by the year 2030 and beyond.

“In recognition of this, the government has designed the ‘Decade of Gas’ programme to ensure that gas actually plays a role in lifting us from the challenges that confront us in order to drive sustainable development.

“The work done so far has aggregated the gas demand and supply views, infrastructure requirements and the suitable pricing framework which will serve as the enabler for unlocking the investments required.

“That work reveals that growth in gas demand outstrips supply. Between 2020 and 2030, demand is expected to grow at a compound annual growth rate of 16.6 per cent p.a. and Nigeria may face an impending gas supply crisis with a potential shortfall of 3.1 bcf/day by 2030.

“However, Natural gas production is projected to increase from 8.0 bcfd in 2020 to 12.2 bcfd in 2030 driven by major projects such as NLNG Train 7 & Train 8, Nigeria/Morocco pipeline, Ajaokuta-Kaduna-Kano (AKK) Natural Gas Pipeline Project, and so many other gas projects,” he explained.

Komolafe urged investors to take advantage of the opportunities provided by the PIA which include: zero-hydrocarbon tax for deep water developments, reduced royalty rates based on production and terrains, and tax consolidation provisions amongst others.

Benchmarked against the best international standards, the NUPRC boss stressed that the new fiscal regime was targeted at achieving reduced unit cost per barrel, transparency in hydrocarbon accounting as well as operational efficiency.

He listed other reasons why the PIA was enacted to include the search for a conducive operating environment, to increase oil and gas reserves and production as well as reduce carbon footprint.

“The commission has intensified efforts toward eliminating flared gas while arresting methane and other fugitive gas emissions, by commercialising 49 flare sites through the Nigerian Gas Flare Commercialisation Programme (NGFCP).

 “The significance of this is that more gas would be available for domestic utilisation as Liquefied Petroleum Gas (LPG), feedstock for power generation plants, fertiliser plants, petrochemicals and export,” he added.

He also reassured willing investors that the implementation of the Host Communities Development Trust (HCDT) had restored confidence and created a more cordial relationship between the host communities and the operators.