As NNPCL, partners lead Africa in $13.5bn upstream investment surge
In recent years, Africa’s investment climate has seen significant fluctuations, with Foreign Direct Investment (FDI) declining amid widespread economic uncertainties. Nigeria, as the continent’s second-largest economy, hasn’t been immune to these challenges. Issues such as economic instability, currency volatility, and rising operational costs—compounded by increasing inflation—have made doing business in Nigeria increasingly difficult. As a result, more than 20 companies have shut down and relocated their investments to other markets between 2020 and 2024. This exodus has not only affected the business landscape but has also led to substantial job losses, further aggravating the already dire youth unemployment situation in Nigeria.
However, in this dire strait, the Nigerian National Petroleum Company Limited and other International Oil Companies, some of which are in Joint Venture operations with the former, offered a glimmer of hope by making Nigeria Africa’s top upstream investment destination of choice in 2024.
A market intelligence firm, Wood Mackenzie, in its recent report, shows that Nigeria ranks as Africa’s leading destination for upstream oil and gas investment in 2024. The country accounted for three out of four Final Investment Decisions (FIDs) totalling $13.5 billion announced by global oil and gas majors in 2024.
The FIDs announced within the Nigerian market included Shell’s $122 million investment in the Iseni Gas Project, TotalEnergies’ $566 million commitment to the Ubeta Gas Project and Shell’s approval of the Bonga North Tranche 1 project, estimated to be a $5 billion investment.
Iseni Gas Project,
Shell Petroleum Development Company of Nigeria (SPDC) and its joint venture (JV) partners, in February 2024, decided to move ahead with the development of the Iseni gas field in Nigeria to supply the Dangote Fertiliser and Petrochemical Plant.
The company’s JV partners include the Nigerian National Petroleum Company (NNPC) Limited, TotalEnergies EP Nigeria, and Nigerian Agip Oil (NAOC). SPDC is the operator of the JV.
SPDC explained that the initiative would involve the construction of a dedicated gas facility by the JV to supply 100 million standard cubic feet of gas per day to the Dangote Fertiliser and Petrochemical Plant for 10 years.
SPDC Managing Director, Osagie Okunbor, said that the FID marked a major step in underpinning the Nigerian government’s ‘Decade of Gas’ vision.
Okunbor said, “This investment decision is a critical step in pursuing the development of the gas-rich Iseni field, which is part of the Okpokunou Cluster in Oil Mining Lease 35 located in Sagbama Local Government Area of Bayelsa State.”
He further said that the project would boost gas deliveries to the domestic market and contribute to driving economic growth.
The $2.5bn Dangote Fertiliser and Petrochemical Plant is said to be the largest urea complex in the African continent. Its production capacity is three million tonnes per annum, which meets 65 per cent of the fertiliser requirements in Nigeria. Furthermore, the plant caters to all the key markets in the sub-region.
The Minister of State, Petroleum Resources (Gas), Ekperikpe Ekpo, said, “I am extremely excited with SPDC, NNPCL, TotalEnergies, NAOC who worked assiduously for the realisation of the FID on the Iseni project that is capable of producing the equivalent of 400MW of energy, which will be delivered into the domestic market when construction is completed.
“This is a significant milestone in our quest to achieve our aspirations of the Decade of Gas initiative.”
Royal Dutch Shell has in January 2024 signed an agreement to divest SPDC to Renaissance, a group of four Nigeria-based exploration and production firms and an international energy group.
$566 million Ubeta Gas Project
The $550 million upstream gas project between NNPC Ltd and TotalEnergies on the development of the Ubeta field took off in September 2024.
The Special Adviser to the President on Energy, Olu Verheijen, disclosed this during an inaugural US-Nigeria Strategic Energy Dialogue, hosted by the U.S. State Department in Washington, DC.
The signing ceremony of the $550 million FID on the Ubeta Field Development Project took place in Abuja in June 2024. The Ubeta field, which was discovered in 1964, is located northwest of Port Harcourt, Rivers State.
Speaking at the inaugural US-Nigeria Strategic Energy Dialogue, Verheijen explained that the upstream gas project would deliver 350 million standard cubic feet of gas per day when operational.
She added that major energy reforms introduced by President Bola Ahmed Tinubu since June 2023 focused on improving energy security, attracting investments, and deepening collaboration with key partners, including the US government.
She said the key reforms had improved the viability of the gas-to-power value chain of the country.
The reforms, according to her, included initiatives to improve cash flows in electricity distribution through smart metering and the payment of outstanding debts owed to investors and to reduce carbon emissions from gas production.
She added that the President issued five new executive orders to support the reform efforts, aimed at providing fiscal incentives for investment and reducing the cost and time of finalising and implementing contracts to develop and expand gas infrastructure.
The presidential aide said the directives were aimed at immediately unlocking up to $2.5 billion in new oil and gas investments in the country.
Responding, the U.S. Assistant Secretary of the State Department’s Bureau of Energy Resources, Geoffrey Pyatt, said the dialogue was apt and strategic.
“The inaugural U.S.-Nigeria Strategic Energy Dialogue has set the stage for strengthened energy collaboration between the United States and Nigeria. Together, we’re advancing shared energy security, decarbonisation, and economic growth goals,” he said.
Bonga North deep-water project
Also in December 2024, Shell Nigeria Exploration and Production Company Limited (SNEPCo), a subsidiary of Shell plc, announced a final investment decision (FID) on Bonga North, a deep-water project off the coast of Nigeria.
The company said Bonga North would be a subsea tie-back to the Shell-operated Bonga Floating Production Storage and Offloading (FPSO) facility which Shell operates with a 55% interest.
The $5 billion Bonga North project involves drilling, completing, and starting up 16 wells (8 production and 8 water injection wells), modifications to the existing Bonga Main FPSO and the installation of new subsea hardware tied back to the FPSO, according to the company.
The project is expected to sustain oil and gas production at the Bonga facility.
Bonga North currently has an estimated recoverable resource volume of more than 300 million barrels of oil equivalent (boe) and will reach a peak production of 110,000 barrels of oil a day, with the first oil anticipated by the end of the decade.
“This is another significant investment, which will help us to maintain stable liquids production from our advantaged Upstream portfolio,” said Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director.
According to the oil giant, Bonga North will help ensure Shell’s leading Integrated Gas and Upstream business continues to drive cash generation into the next decade.
SNEPCo (55%) operates the Bonga field in partnership with Esso Exploration and Production Nigeria Ltd. (20%), Nigerian Agip Exploration Ltd. (12.5%), and TotalEnergies Exploration and Production Nigeria Ltd. (12.5%), on behalf of Nigerian National Petroleum Company Limited (NNPC).
Bonga is a deep-water development located in OML 118, at water depths exceeding 1,000 meters. Production at the Bonga FPSO began in 2005, with a capacity to produce 225,000 barrels of oil per day. The project produced its one-billionth barrel of crude oil in 2023.
“The investment in Bonga North is expected to generate an internal rate of return (IRR) in excess of the hurdle rate for Shell’s Upstream business,” Shell said.
President Tinubu welcomes investment
President Bola Ahmed Tinubu welcomes Shell and its partners’ announcement of the Final Investment Decision (FID) on the Bonga North Deep Offshore Field. This landmark development, Nigeria’s first deepwater oil project in over a decade, underscores the transformative impact of the President’s policies and reforms in attracting investments in the oil and gas sector.
The Bonga North oilfield represents an impressive estimated $5 billion investment and is expected to yield approximately 350 million barrels of crude oil.
Tinubu remarked, “The Renewed Hope Agenda fundamentally focuses on attracting investments to transform the Nigerian economy and deliver prosperity to our people. We designed our policies and reforms from the start of my administration to achieve this goal. Shell and its partners’ decision to invest in Bonga North affirms the success of our efforts. We will continue to offer the necessary support to ensure their success and the realisation of Nigeria’s energy potential.”
Significant Gas Sales Agreement
In October 2024, the NNPC and three IOCs—Shell Petroleum Development Company, TotalEnergies, and Eni—signed a Gas Sales and Purchase Agreement (GSPA) for the $3.5 billion Brass Fertiliser and Petrochemical project in Bayelsa State. This agreement involves the supply of 270 million standard cubic feet of gas per day to the project, marking the largest single GSPA to any domestic gas off-taker in Nigeria. The project is expected to generate over $1.5 billion annually from exports of fertilizers, petrochemicals, and other gas-based products. The Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, highlighted that this milestone demonstrated Nigeria’s business-friendly environment and the government’s commitment to investor-friendly policies.
Experts’ comment
With a total of $13.5 billion FIDs announced in Niger in 2024, the African Energy Chamber applauded the government’s policy reforms and commended the nation’s dedication to simplifying policies and facilitating market growth for global oil and gas investors.
According to the AEC, the investments reflect Nigeria’s ongoing efforts to unlock its hydrocarbon potential through investor-friendly policies and strategic global partnerships.
The Chamber commended the Nigerian government for its proactive legislation aimed at attracting foreign investments, streamlining project implementation and reducing bottlenecks.
In 2024, Nigeria introduced several initiatives to create a conducive environment for oil and gas investors, including new tax incentives aimed at attracting up to $10 billion in natural gas investments – offering tax relief for gas investors, reducing corporate income tax and extending capital allowance benefits – for deepwater gas projects.
Other policies include the Presidential Directive on Local Content Compliance Requirements, 2024 to address reduction in oil and gas investments caused by high operating costs compared to global markets. The Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines, 2024 reduces time spent to award contracts for oil and gas projects.
In addition to the directives, Nigeria also launched its 2024 oil and gas licensing round, offering 19 blocks for exploration, demonstrating its commitment to continued collaboration with local, regional and international partners.
“With this momentum, further FIDs are anticipated, including TotalEnergies’ expected $750 million commitment to the Ima Shallow Gas Project in 2025,” the AEC said.
With 45% of the Nigerian population lacking access to electricity and affordable and reliable energy, the Chamber believes the FIDs and policies are a right step in driving the country’s universal energy access and socioeconomic development targets.
“Nigeria continues to set a benchmark for investor-friendly policies, leveraging its hydrocarbon potential and government initiatives to drive sustainable development,” stated NJ Ayuk, Executive Chairman of the AEC, adding “The Chamber commends President Tinubu, Special Adviser to the President on Energy Olu Arowolo Verheijen and Nigerian energy stakeholders for fostering an environment that attracts global investments, contributing to energy poverty eradication, sustainable development and global energy market stability.”
