Nigeria’s offshore oil and gas production market is forecasted to experience substantial growth, with its value projected to surge from $34.18 billion in 2023 to $47.03 billion by 2031. This represents a Compound Annual Growth Rate (CAGR) of 4.1 per cent over the period, according to a comprehensive report published by Research and Markets, the world’s largest market research store based in Dublin, Ireland.
The 76-page report titled “Nigeria Offshore Oil and Gas Production Market Size and Forecast, Regional Share, Trend, and Growth Opportunity Analysis” highlights Nigeria’s critical role as Africa’s premier crude oil producer, with the production of 552.84 million barrels of crude oil, including condensates, in 2023. The report underscores the resilience and growing importance of Nigeria’s offshore oil and gas industry as it navigates both global demand pressures and national energy objectives.
Nigeria’s offshore oil and gas production market is meticulously segmented by type and application, with crude oil remaining the dominant segment. International demand for Nigerian crude oil continues to drive this sector’s growth. The transportation sector led the market in 2023 and is anticipated to maintain its prominence throughout the forecast period. This continued demand is largely due to Nigeria’s strategic position as a major supplier of high-quality crude to international markets, especially in Europe and Asia.
Simultaneously, the power generation segment is expected to witness significant growth, with a projected CAGR of 5.7 per cent. This growth is fuelled by the increasing demand for natural gas in electricity generation, as countries, including Nigeria, move towards cleaner energy solutions with lower carbon emissions compared to traditional oil.
The report further analyses the competitive landscape of Nigeria’s offshore oil and gas production sector, with industry giants such as TotalEnergies and Shell Plc playing pivotal roles in shaping the market. These companies have been at the forefront of driving market growth through strategic mergers, acquisitions, and partnerships. These inorganic growth strategies, combined with technological advancements in oil exploration and production, have helped enhance operational efficiency and expand market outreach.
One notable trend is the shift by Nigeria’s oil and gas producers towards increasing offshore natural gas exploration and production. This shift is in line with Nigeria’s broader energy policy, which aims to position natural gas as a key player in the global energy market while ensuring sustainable development at home. This trend is also closely aligned with the Nigerian government’s “Decade of Gas” initiative, which seeks to leverage the country’s vast natural gas reserves to stimulate economic growth and reduce emissions.
Nigeria’s Petroleum Industry Act (PIA), enacted in August 2021, plays a critical role in ensuring investor confidence in the upstream oil and gas sector. The PIA’s implementation has been instrumental in rejuvenating investor interest by providing a clearer regulatory framework and offering incentives for companies operating in the sector. Importantly, the Act also aims to enhance community welfare in regions impacted by oil exploration, aligning with broader sustainable development goals.
The report emphasises that Nigeria’s offshore oil and gas production market is being shaped by various factors, from increasing international demand to strategic government policies. This dynamic environment presents both opportunities and challenges for stakeholders across the value chain, who must continuously refine their strategies to remain competitive.
While Nigeria remains Africa’s largest crude oil producer, the country has faced several challenges that have impacted production levels in recent years. The report notes that disruptions due to unplanned production outages and infrastructure challenges have, at times, caused Nigeria’s production levels to fall behind Angola, which briefly surpassed Nigeria as Africa’s top oil producer in 2022.
Historically, Nigeria has faced production declines during periods such as 2008-2010, 2016-2018, and 2022. These declines were attributed to a combination of factors, including economic recessions, militant attacks on oil infrastructure, strikes by oil workers, and facility closures. However, the report suggests that the increasing demand for natural gas, driven by its lower carbon emissions compared to oil, is expected to bolster the sector’s growth and mitigate some of these challenges.
As part of efforts to boost investor confidence, the Nigerian government has reiterated its commitment to creating a conducive and competitive environment for foreign investments in the oil and gas sector. Speaking during a meeting with the President of Exploration and Production at TotalEnergies, Nicolas Terraz, in Abuja, Nigeria’s Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, assured international oil companies of the government’s support.
The minister emphasised that the government is fully committed to addressing any challenges that may have hindered investments in the past, reaffirming Nigeria’s readiness to welcome more investments in the sector. “Every necessary assurance to investors must not only be given but must also be seen to have been made,” Lokpobiri stated. He added that the federal government understands the importance of providing a stable investment climate and is committed to ensuring that Nigeria remains a secure destination for global energy investments.
TotalEnergies, a longstanding partner in Nigeria’s oil and gas industry, expressed satisfaction with the Nigerian government’s efforts to create an investor-friendly environment. During the Abuja meeting, Terraz confirmed that TotalEnergies is preparing to finalise investments in several key projects, including the Bonga North Offshore project and joint ventures with Shell Petroleum Development Company (SPDC) and Nigerian National Petroleum Company Limited (NNPC).
These projects, which have already received board approval, are expected to significantly boost Nigeria’s offshore production capacity and contribute to the country’s economic growth. Terraz noted, “We remain committed to further deepening our investments in Nigeria, especially with the opportunities that projects like Bonga North Offshore and our joint ventures with SPDC and NNPC present.”
Nigeria’s offshore oil and gas sector stands at a critical juncture, with escalating growth prospects and strategic partnerships paving the way for substantial economic and infrastructural development. As the country continues to position itself as a key player in the global energy market, the ongoing commitment from both the Nigerian government and international investors like TotalEnergies will be crucial in driving the industry forward.
The projected growth in Nigeria’s offshore oil and gas market is a testament to the resilience and potential of the country’s energy sector, which is poised to play a pivotal role in shaping the future of energy production not just in Africa, but globally.
