Investment in Nigeria’s gas sector was the main topic of discussion at the the second day of Africa Oil Week being hosted at the Cape Town International Convention Centre (CTICC).
Nigeria is fast becoming a powerhouse in the gas sector in Africa.
Olu Verheijen, Special Advisor to the Nigerian President on energy noted that the country sees oil and gas as a main driver of economic opportunity in the coming years.
“Although Nigeria’s oil and gas sector contributes less than 10 percent to GDP, it accounts for 90 percent of foreign exchange earnings, and 60 percent of fiscal income,” Verheijen said.
“The value of our currency, the government’s ability to invest in goods and services that markets cannot provide like public health and education — are all dependent on what happens in this sector.
“Our dependence on this sector has had a consequential impact on both our economic growth and poverty reduction aspirations,” she said.
Verheijen told delegates that the central priority of the new Nigerian administration under the leadership of President Bola Ahmed Tinubu, is “to harness all our resources to transform Nigeria into a thriving, productive and diversified economy”.
She called for significant investment in the sector and argued that Nigeria is open for business.
“We require significant investments to restore and grow production in Nigeria,” Verheijen said.
GROWTH AND INVESTMENT DISCUSSION
The country is also very vocal on the issue of low-carbon initiatives and is focused on its natural gas industry.
During a panel discussion, moderated by Olumide Esan, the West Africa energy and resources leader for Deloitte, the concept of how ready Nigeria is for investment in the gas sector was investigated.
Eng Ghenga Komolafe, the commission chief executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) said that yes Nigeria is open and has made a “courageous” decision to deregulate the gas industry with the Petroleum Industry Act 2021.
Komolafe argued that the Nigerian government is trying to stabilise its gas industry and this will impact the stability of the Nigerian economy.
HOW GAS CAN HELP NIGERIA
Moderator Esan was specifically interested in how the country hopes to utilise the wealth of resources it has to create a more robust and effective gas industry that will help eradicate unemployment and poverty.
Adegbite Falade, the managing director at Aradel Holdings said that Nigeria is looking to add more import substitution policies in Nigeria’s gas sector.
Nigeria has a number of import substitution policies already that “aim to increase local production through subsidies, tariffs, quotas, and other barriers to trade,” according to a statement by the International Trade Administration.
“Among these measures is a directive which stipulates that preference be granted to domestic manufacturers, contractors, and service providers in all government procurements”.
Falade noted that Nigeria is also focused on fostering network access and the sharing of infrastructure to make the sector more profitable.
MAKING MONEY VERSUS THE IMPACT OF CLIMATE CHANGE
The Nigerian government has a responsibility to utilise the resources it has for the country’s development, but Esan also noted that the State has to balance the use of natural resources and the impact it has on the environment.
Sops Ideriah, the group managing director at SLB West Africa says that his company wants to invest in greener gas solutions that allow for the use of energy generation in a more sustainable way. He said that the company is looking at hydrogen production.
Ahonsi Unigbe, CEO of Petralon Energy, said that Nigeria needs to be an “African Tiger” in the same vein as the Chinese.
He argues that Nigeria needs to be just like Saudi Arabia and China in their drive to use the resources they are given for economic growth and the creation of capital.
Once this is done, the State can use its stock of cash reserves to transition to cleaner energy.
WHY SHOULD INVESTORS LOOK TO NIGERIA?
Nigeria is very open to foreign investment, specifically in the gas space.
Komolafe told delegates at the conference that Nigeria is a preferred destination for investment for a number of reasons. The most prominent reason is that the country has a stable government and that this executive branch has created policies that are driven towards attracting investment.
Komolafe concluded that Nigeria’s sheer amount of natural gas is enough to be a formidable driver of foreign investment.