Nigeria’s efforts to rejuvenate its oil and gas sector appear to be gaining traction, with early indicators suggesting that the country’s new upstream licensing round is attracting sizable interest from global energy firms. The renewed engagement comes at a time when government officials are aggressively pushing reforms to reverse years of underinvestment, production decline, and operational inefficiencies that have plagued Africa’s largest oil producer.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) last week disclosed that over two dozen international and regional companies had purchased bid documents for the 2024–2025 licensing round. According to details referenced in a BusinessDay briefing, senior officials said the response “exceeded expectations,” particularly from European independents and Middle Eastern state-linked operators seeking to expand their African upstream portfolios.
Industry analysts note that Nigeria’s upstream sector has faced steep headwinds in recent years, with crude production falling from 2.1 million barrels per day (bpd) in 2014 to below 1.4 million bpd at various points in 2023. Persistent crude theft, pipeline vandalism, aging infrastructure, regulatory uncertainty, and over a decade without consistent licensing rounds created a climate that discouraged long-term capital.
The passage of the Petroleum Industry Act (PIA) in 2021 was hailed as a turning point, but implementation challenges slowed the impact. Now, however, officials believe that progress is more visible on the ground.
New Rules, New Confidence
At the core of the renewed global interest is Nigeria’s decision to streamline fiscal terms, reduce signature bonus obligations, and cut bureaucratic approval timelines. The NUPRC has emphasized the need to compete aggressively for capital in a world where investments in fossil fuels are becoming more selective.
The commission also introduced a transparent digital process that allows bidders to review data and submit applications electronically, a shift that stakeholders say has boosted confidence in the fairness of the process.
Energy economist Michael Adeyemi explains that Nigeria is “finally beginning to look investable again” thanks to more predictable royalty structures, improved contract transparency, and the perception that the government is willing to enforce operational discipline across the sector.
The Big Question: Will Production Actually Rise?
Experts remain cautiously optimistic. While increased participation in licensing rounds is a positive signal, it does not immediately translate into higher production. Developing new fields can take years, and many global firms have become conservative about deepwater investments due to growing ESG pressures and financing constraints.
Still, Nigeria has a unique advantage: undeveloped reserves remain vast. The country holds an estimated 37 billion barrels of crude and 206 trillion cubic feet of natural gas, with large portions in mature basins where existing infrastructure can support quicker development timelines.
According to data linked to the BusinessDay report, at least five prequalified companies have expressed interest in reviving brownfield assets that require marginal investments but promise faster output.
Gas Is the New Priority
Beyond oil, Nigeria is also using the licensing round to accelerate gas development. With global markets shifting and Europe actively seeking new suppliers after the Russia–Ukraine crisis, officials believe Nigeria’s gas potential could drive the next decade of investment.
The NUPRC has created distinct fiscal options for gas-rich fields, including lower royalties and tax incentives to support processing infrastructure and export projects. In addition, the government recently reaffirmed its commitment to developing the long-delayed Nigeria–Morocco Gas Pipeline and expanding domestic pipeline networks.
Gas-based industries including fertilizers, petrochemicals, and power generation are expected to benefit significantly over the long term. The Dangote Petrochemical Complex, the Brass Fertilizer Initiative, and new gas-to-power plants are considered potential anchors for a broader industrial resurgence.
Local Content and Indigenous Players
The Nigerian Content Development and Monitoring Board (NCDMB) is also leveraging the licensing round to strengthen indigenous participation. Local operators have increasingly become prominent in marginal field development, even though funding remains a major constraint.
With this round, government agencies say they want to support partnerships between foreign firms and indigenous companies, ensuring skills transfer and increased domestic capacity. Analysts believe this could create a more balanced industry that no longer relies solely on international majors.
Pipeline Security: A Make-or-Break Factor
Despite progress, pipeline vandalism and crude theft remain existential threats. Although the government has deployed advanced surveillance technologies and contracted additional security outfits, the problem persists in many Niger Delta communities.
Stakeholders argue that unless the root causes unemployment, community neglect, and weak enforcement are addressed, investment could again falter.
Global Market Dynamics
Nigeria’s optimism is partly supported by favorable global market dynamics. With OPEC forecasting steady demand over the next decade and geopolitical tensions disrupting supply chains, countries with untapped reserves are becoming more attractive to investors.
However, global oil prices remain volatile. If prices fall significantly, it could dampen enthusiasm among bidders.
What Happens Next?
The NUPRC plans to conclude the current licensing cycle by early 2025, after which the winning bidders will begin negotiating production-sharing contracts, environmental plans, and development programs.
The government hopes to ramp production back above 1.7 million bpd by 2026 an ambitious target but one that appears more reachable if current momentum holds.
For now, industry experts say the early signals justify cautious optimism. If regulatory consistency is maintained, and if the government can keep pipelines secure, Nigeria’s oil and gas sector may finally be on the brink of a sustainable revival.
