Mr Israel Aye, partner at Commercial and Energy Law Practice has stated that Nigeria’s efforts to ramp up crude oil production is impacted by global energy transition challenges and local industry hurdles.
Aye stated this during an interview with TVC, offering a comprehensive analysis of the current state of oil and gas production, the pressing need for investment, and the implications for Nigeria’s economic growth.
Efforts to Boost Production
Nigeria has set an ambitious goal to increase oil production from its current 1.8 million barrels per day (bpd) to 2 million bpd, with long-term aspirations of reaching 3–4 million bpd. Aye acknowledged the progress made but stressed the importance of contextualising these efforts within the broader realities of the energy sector.
“The energy transition era demands that we maximise revenue from petroleum resources to drive development and diversify away from fossil fuels,” Aye explained. He highlighted that Nigeria had previously achieved 2.5 million bpd in 2007 but faced subsequent declines due to underinvestment, infrastructural challenges, and security concerns.
Investment Challenges and Policy Gaps
Aye noted that a significant factor hindering production growth is the decline in investment, particularly in the deepwater segment, which accounts for 55–60% of Nigeria’s oil production. “We haven’t sanctioned any new greenfield projects in deepwater for over a decade,” Aye said, pointing to missed opportunities and unresolved issues in portfolio management as critical roadblocks.
Does the Petroleum Industry Act Support Dangote’s Court Case?The Petroleum Industry Act (PIA), hailed as a transformative legal framework, has not yet delivered the anticipated influx of investments. Aye emphasised that beyond legislation, clear and consistent policy direction is crucial. “Attracting investment requires not just laws but robust policy implementation and coordination,” he added.
Domestic Gas and Economic Diversification
Turning to the gas sector, Aye highlighted its potential as a driver of industrial growth and energy security. However, he stressed that gas production is closely tied to oil exploration activities. “To fully harness domestic gas for power and industry, we must first stabilise and grow our upstream oil production,” he argued.
While LNG exports have performed relatively well, domestic gas utilisation for power generation and industrial use remains underdeveloped. Aye urged policymakers to prioritise investments in gas infrastructure and create incentives for local utilisation.
Global Dynamics and Missed Opportunities
On the global stage, geopolitical events such as the Russia-Ukraine war and fluctuations in oil prices have presented opportunities that Nigeria has struggled to capitalise on due to readiness and structural inefficiencies.
“Nigeria needs clear targets, transparent governance, and public engagement in managing the petroleum economy,” Aye asserted. He emphasised the importance of holding stakeholders accountable and ensuring that petroleum wealth drives broader economic benefits for Nigerians.
Israel Aye’s analysis shows Nigeria needs a comprehensive strategy to optimise its oil and gas sector during this critical period. With targeted investments, policy alignment, and robust infrastructure development, Nigeria can position itself to benefit from its vast energy resources while transitioning to a diversified and sustainable economy.
