In 2024, Nigeria’s energy sector reclaimed its status as Africa’s premier destination for upstream oil and gas investment. Spearheaded by visionary leadership under President Bola Tinubu, the country made strategic advancements that firmly placed it at the forefront of the continent’s energy landscape. These achievements are underscored by Nigeria accounting for three out of the four Final Investment Decisions (FIDs) across Africa, with a combined value exceeding USD5 billion.
Nigeria Leads in Upstream CAPEX
By 2024, Nigeria has surpassed Angola to reclaim its top spot in upstream capital expenditure (CAPEX), with significant developments across multiple projects. According to data, Nigeria’s CAPEX is projected to exceed $6 billion, outpacing other African nations.
The drivers behind this achievement include development drilling at major sites such as Akpo and Egina and the initiation of the Bonga FPSO main life extension project. Investments from majors, national oil companies (NOCs), and African-focused independents reflect a robust and diverse investment ecosystem.
In Angola, projects such as Eni’s Marine XII Phase 2 have maintained momentum, but they fall short compared to Nigeria’s aggressive push in the upstream segment. Meanwhile, Congo, Uganda, and other countries are progressing incrementally, but Nigeria’s sheer scale and pace set it apart.
Strategic Fiscal Incentives and Policies
Central to Nigeria’s success in 2024 were five landmark presidential directives and a series of fiscal incentives designed to attract investment and drive growth in the energy sector. These measures included tax cuts for pre-FID oil and gas projects and the introduction of production sharing contracts for non-associated gas (NAG) developments. Additionally, Nigeria announced new deep-water fiscal incentives, offering production tax breaks to pre-FID oil and gas developments and introducing the first non-associated gas (NAG) profit-sharing terms for deep-water PSCs. These reforms significantly enhanced Nigeria’s competitiveness in attracting capital-intensive upstream projects.
The implementation of these initiatives coincided with geopolitical and regulatory challenges across Africa, positioning Nigeria as a stable and favorable investment destination. For instance, the Niger-Benin pipeline became operational in 2024, enabling Nigeria to solidify its position as Africa’s leading oil exporter despite initial disruptions due to geopolitical tensions.
Landmark FIDs and Strategic Investments
In 2024, four Final Investment Decisions (FIDs) were achieved in West Africa, representing a total commitment of $13.5 billion. Nigeria led the charge with prominent projects such as the Iseni and Ubeta fields, which accounted for a significant portion of the region’s total CAPEX.
Projects like Bonga North Tranche 1, with an estimated CAPEX of $4.6 billion, underline the country’s capacity to execute large-scale developments. These investments are underpinned by Nigeria’s recent fiscal reforms, which have reduced pre-FID risks and created an enabling environment for both onshore and offshore projects.
Fiscal Incentives Bolster Confidence
A major factor in Nigeria’s resurgence is the introduction of new fiscal policies aimed at enhancing the attractiveness of the upstream sector. The government announced production tax credits for deepwater oil and gas developments, alongside profit-sharing terms for non-associated gas projects. These measures have significantly improved project viability and reduced investor uncertainty.
Additionally, the Niger-Benin pipeline, which became operational in 2024, has further bolstered Nigeria’s status as the leading exporter of oil in Africa. Despite geopolitical challenges, such as border disputes and security concerns, the successful resolution of these issues highlights Nigeria’s commitment to maintaining stable and secure export routes.
Geopolitical Stability and Regional Influence
Nigeria’s leadership in the oil and gas sector is also a reflection of its geopolitical strategy. The establishment of the African Energy Bank, headquartered in Abuja, is a significant milestone. The bank aims to finance oil, gas, and renewable energy projects across Africa, positioning Nigeria as a central player in the continent’s energy transition.
Moreover, Nigeria’s strategic decisions stand in contrast to Angola, where marginal economics and delayed FIDs have hindered growth. In Angola, the revised production quota and legislative changes are steps in the right direction, but Nigeria’s proactive measures continue to yield more immediate results.
Outlook for the Future
The Nigerian government’s forward-looking policies and aggressive push for investments are expected to sustain its leading position in Africa’s upstream sector. With ongoing projects, significant CAPEX commitments, and supportive fiscal frameworks, Nigeria is poised to maintain its dominance.
As other African nations navigate economic and geopolitical challenges, Nigeria’s example underscores the importance of strategic reforms and investor-friendly policies. Its success not only drives national growth but also solidifies its role as a key player in the global energy landscape.
The impact of Nigeria’s 2024 energy reforms extends beyond immediate investments. By fostering a stable regulatory environment and offering attractive fiscal incentives, the country has laid the groundwork for unprecedented levels of investment in 2025 and beyond. This trajectory reaffirms Nigeria’s role as a powerhouse in Africa’s energy sector and a model for other nations seeking to rejuvenate their upstream industries. Nigeria in 2025, aims to build on its achievements, attract greater investment, and solidify its standing as a leading global energy powerhouse.