Nigeria’s oil sector is a shadow of its bustling self as foreign direct investment (FDI) plummets from billions of dollars to mere trickles in millions.
FDI in the sector fell to less than half a billion dollars in the first half of 2023, with the full-year figure unlikely to match a peak of $22.5 billion in 2019.
When an oil executive said Nigeria needed $25 billion per annum in investments to be able to achieve a production target of 2 million barrels daily, the task at hand for Nigeria came into better perspective.
The 2010s witnessed a period of significant FDI from international companies eager to tap into the country’s vast oil and gas reserves as the future for Nigeria’s nascent indigenous upstream oil and gas industry looked bright, almost dazzlingly so.
In 2014, Nigeria attracted the largest amount of FDI of any African country, with inflows exceeding $22.1 billion. This influx of capital fueled major projects, including deepwater exploration and development of new oil fields.
Oil was selling for more than $100 a barrel, as much as twice the production costs in Nigeria’s trickiest deepwater fields and several multiples of those in its shallow water and onshore fields.
Nigeria’s oil rigs, which depicts the level of oil fields averaged 35 rig counts in 2014, a development that translated to increased crude production as Nigeria’s output averaged 2.2 million barrels per day.
In August 2014 “the perfect storm of collapsing oil prices” arrived, said Carlos Hardenberg, lead portfolio manager of Templeton Emerging Markets Investment Trust. The naira fell, investors fled and Niger Delta militants who wanted a greater share of the country’s energy wealth struck.
Little has changed since then.
