The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) says the country’s total annual upstream capital expenditure decreased from $27 billion in 2014 to less than $6 billion in 2022.

NUPRC CEO Gbenga Komolafe revealed this on the sideline of the World Petroleum Congress (WPC) held on Sunday in Calgary, Canada.

Mr Komolafe, represented by the agency’s executive commissioner Kelechi Ofoegbu, said the figure represented a 74 per cent decrease in capital expenditure (CAPEX).

He attributed the decline in CAPEX to several factors while emphasising that regulatory uncertainty significantly impacted investment in Nigeria’s oil and gas industry.

Mr Komolafe further said prevalent in the years preceding the enactment of the Petroleum Industry Act (PIA) also affected investment in the industry. He said other factors are the de-funding of fossil fuel development occasioned by energy transition and the global call for decarbonisation.

According to him, most international oil companies (IOCs) deprioritised Nigeria in their portfolios, which led to the redirection of CAPEX to other countries. This, he noted, was with attendant dwindling investment in Nigeria’s upstream sector.

‘‘This under-investment impacted negatively on the country’s rig count. On average, Nigeria had 17 active oil rigs in 2019, representing one of the highest counts in the African continent as of then,” Mr Komolafe explained. “The average rig count declined to eleven in 2020, seven in 2021, 10 in 2022, but recently grew to as high as 31 by August 2023, a positive signal of new investments trickling into the country.”

The NUPRC boss added, “The relatively high crude oil prices may have also attributed to the increase in activities in the petroleum upstream sector. We also see this as a reflection of investors’ acceptance of the PIA and its effective implementation by the regulator.

“The projected outlook over the next few years looks promising, and as the regulator in the oil and gas upstream sector. We would leverage this opportunity by doing all that is necessary to attract more investments and revamp the Nigerian upstream sector.”

The NUPRC chief also mentioned that the PIA has repositioned the Nigerian petroleum sector by creating efficient and effective governing institutions with clear and separate roles for the industry. According to him, it has also enabled transparency, accountability, and a conducive environment for business.

Mr Komolafe stressed that since the enactment of the PIA, NUPRC had developed 24 priority regulations which would give meaning and intent to the spirit of the PIA and create a predictable regulatory environment for operators and other stakeholders.

On energy transition, he maintained that the need for oil and gas producers to embrace the reality of green transition and take strategic positions to leverage the opportunities presented by the unfolding era had become more pressing.

‘”With Nigeria’s huge gas reserves of 208.83 TCF and a potential for an increase to about 220 TCF within the next 10 years, Nigeria has adopted natural gas as our transition fuel in our stride at developing cleaner fuels and staying on track with our net zero emission commitment of 2050,” said Mr Komolafe. 

(NAN)