Nigeria’s offshore oil and gas production market continues to expand, with a significant valuation of US$ 34.18 billion in 2023. As Africa’s leading crude oil producer, Nigeria is expected to see this market grow to an estimated $ 47.03 billion by 2031, at a compound annual growth rate (CAGR) of 4.1% over the forecast period from 2023 to 2031. The production of 552.84 million barrels of crude oil, including condensate, in 2023 underscores Nigeria’s pivotal role in the global energy landscape.
The market is segmented by type and application, providing a clear view of industry dynamics. Crude oil stands out as the dominant product, driven by strong international demand for Nigerian oil, which is highly favoured due to its quality and strategic geographical position. On the application side, transportation leads the market, accounting for a substantial share in 2023, and is expected to maintain this trajectory throughout the forecast period.
Power generation is another key sector, demonstrating impressive growth potential. As global energy demand rises, particularly for cleaner energy sources, the demand for natural gas in electricity generation is growing. The power generation segment is projected to grow at a CAGR of 5.7%, fuelled by the increasing adoption of natural gas as a preferred fuel for electricity production.
Nigeria’s thriving offshore oil and gas market, major international players such as TotalEnergies SE, CNOOC Ltd, and Shell Plc continue to drive market expansion through strategic growth initiatives. These companies are not only investing heavily in Nigeria’s offshore reserves but also employing inorganic growth strategies such as mergers, acquisitions, and strategic partnerships. These moves are intended to enhance market reach, optimise operations, and meet growing global demand efficiently.
Additionally, these key players are integrating advanced technology into their production processes, helping to improve operational efficiency and reduce costs. This strategic focus on technology and innovation is critical to sustaining the market’s growth, particularly as competition within the global energy market intensifies.
Nigeria’s offshore oil and gas producers are increasingly shifting their focus towards natural gas exploration and production. This transition aligns with the Nigerian government’s broader energy policy aimed at boosting the country’s market competitiveness on a global scale.
The Petroleum Industry Act, enacted in August 2021, is a landmark piece of legislation that underlines the government’s commitment to revitalising Nigeria’s oil and gas sector. It aims to foster investor confidence, particularly in upstream oil and gas development, and promote the welfare of local communities impacted by oil exploration. This regulatory framework is designed to create a more transparent, predictable, and attractive environment for foreign and domestic investors alike, supporting long-term growth in the sector.
A closer look at the key drivers shaping Nigeria’s offshore oil and gas production market reveals several factors propelling its growth. Chief among them is the sustained international demand for oil and gas, coupled with the Nigerian government’s strategic initiatives to support the industry, including efforts to combat theft and illegal activities in the sector.
However, challenges remain, such as the complex regulatory environment and the need for infrastructural upgrades to maintain production levels. Understanding these dynamics is essential for stakeholders across the value chain, enabling them to develop long-term strategies and make informed decisions.
As the market continues to evolve, the period from 2023 to 2031 is set to be transformative for Nigeria’s offshore oil and gas sector. With the government’s clear commitment to advancing the industry, supported by strong international partnerships and growing technological integration, Nigeria is well-positioned to strengthen its global energy influence. This will not only fuel economic growth but also contribute to infrastructural development across the country and the wider African continent.
