Nigeria's oil sector to see significant growth in 2023

Nigeria's oil and gas sector is expected to experience significant growth in 2023, according to a report by Andersen Nigeria. The report highlights the government's measures to combat oil thefts, pipeline vandalism, and illegal refining as key drivers for this anticipated growth. With the reopening of shut-in crude oil wells, Nigeria aims to boost oil production to 2.1 million barrels per day, with potential for further increases in the future. Temitope Kolade, a Senior Manager in Power, Oil, and Gas at Andersen Nigeria, provided insights into the report in a recent interview on CNBC Africa. Kolade's optimistic view of Nigeria's oil and gas sector for this year is underpinned by the impact of the Petroleum Industry Act passed last year. He emphasized the expected surge in investments in 2023, spanning exploration and refining activities. Improved security measures have already led to an increase in oil production, with January 2023 recording a production figure of $1.6 million, up from 1.2 million barrels per day in December 2022. The positive momentum in the sector is expected to instill confidence in investors, leading to further investments. Nigeria's National Petroleum Company Limited (NNPC) is actively engaged in exploration activities, particularly in the northern frontier acreages. Additionally, the country anticipates growth in the refining business this year. The reopening of shut wells in the Niger Delta and the planned increase in daily oil production to 2.1 million barrels per day, potentially rising to 2.8 million barrels per day in the future, raise questions about the implications for Nigeria under the OPEC quota system and its local refining capacity. Kolade pointed out that the surge in production signifies Nigeria's capacity for in-house refining, supported by operational and upcoming refineries like Dangote Refinery and the Port Harcourt Refinery. In light of the evolving global energy landscape, analysts are highlighting Nigeria's natural gas prospects as a source of future export growth. The Petroleum Industry Act has enhanced clarity in production sharing contracts between NNPC Limited and deepwater partners, attracting interest from oil majors towards natural gas opportunities. Kolade emphasized the environmental sustainability and governance benefits of gas, positioning it as a transition fuel as the world shifts away from crude oil. The geopolitical dynamics, such as the Russia-Ukraine conflict and the global demand for alternative energy sources, have created a favorable environment for Nigeria to capitalize on its natural gas reserves. The country's gas capacity and strategic partnerships have positioned it as a promising player in the international gas market, attracting attention from countries seeking secure energy sources. As the oil and gas sector gears up for growth in 2023, Nigeria's focus on expanding investments, leveraging natural gas prospects, and enhancing production capabilities is poised to drive the industry forward. With a supportive regulatory framework and a strategic vision, Nigeria aims to solidify its position as a key player in the global energy landscape.