In a recent update, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has revealed a significant drop in Nigeria’s annual upstream capital expenditure (CAPEX). According to NUPRC’s Chief Executive, Gbenga Komolafe, speaking at the World Petroleum Congress (WPC) in Calgary, Canada, the country’s total annual upstream CAPEX has shrunk from $27 billion in 2014 to less than $6 billion in 2022. This staggering 74% decrease in CAPEX is attributed to a range of factors, with regulatory uncertainty playing a pivotal role.

Komolafe highlighted that the investment climate in Nigeria’s oil and gas industry had been marred by uncertainty, exacerbated by the years leading up to the enactment of the Petroleum Industry Act (PIA). Other contributing factors include reduced funding for fossil fuel development due to the global push for decarbonization and the resultant shift of investment priorities among International Oil Companies (IOCs) away from Nigeria.

The decline in investment had a noticeable impact on Nigeria’s rig count, which dropped from an average of 17 active oil rigs in 2019 to just 7 in 2021. However, there has been a recent upturn, with rig counts reaching as high as 31 in August 2023, partly influenced by rising crude oil prices and increased investor confidence in the PIA and its implementation.

Komolafe stressed the importance of the PIA in reshaping Nigeria’s petroleum sector, creating efficient governing institutions, enhancing transparency, accountability, and fostering a business-friendly environment for petroleum operations. He also noted Nigeria’s commitment to transitioning to cleaner fuels, particularly natural gas, to align with net-zero emission goals by 2050.

The NUPRC is actively working to attract more investments and revitalize the Nigerian upstream sector, leveraging the positive outlook and the opportunities presented by the evolving energy landscape.

The 24th WPC, themed “Energy Transition: The Path to Net Zero,” has drawn over 15,000 visitors from over 100 countries, with discussions on the imperative of decarbonization and the role of gas in Nigeria’s energy future taking center stage.

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