Nigeria risks losing 38% of oil projects to energy transition — NRGI

The Natural Resource Governance Institute (NRGI) has warned that Nigeria risks failing to recover investments in 38 per cent of its upstream oil and gas projects, urging the Federal Government to reassess its petroleum investment strategy amid the global energy transition.

The institute cautioned that some projects could become commercially unviable as global energy markets evolve, exposing the country to stranded assets and potential revenue losses if investments proceed without adequate risk assessment.

The Nigeria Country Manager of NRGI, Tengi George-Ikoli, disclosed this at a policy engagement on “The Role of NNPC in Nigeria’s Energy Transition” in Abuja.

The event was organised by NRGI in collaboration with the Centre for Petroleum, Energy Economics and Law, and the Centre for Energy, Finance and Development.

George-Ikoli said the institute’s analysis examined national oil companies’ investment commitments against scenarios aligned with the International Energy Agency (IEA), assessing the likelihood of upstream projects recovering their costs under changing energy market conditions.

“For Nigeria, we have assessed that Nigeria is 38 per cent at risk of not being able to break even for those projects,” she said.

She urged the government to adopt a more realistic approach to petroleum investments by prioritising projects capable of delivering sustainable returns and contributing meaningfully to national development.

According to her, Nigeria could not afford to maintain a business-as-usual approach while global energy policies, market demand and climate commitments continued to evolve.

She stressed the need to deploy public revenues and investments in ways that support long-term national priorities rather than expose the country to potentially unprofitable projects.

NNPC central to energy transition

George-Ikoli said the Nigerian National Petroleum Company Limited (NNPCL) must play a central role in Nigeria’s energy transition because of its significant interests in the country’s petroleum assets and its contributions to public revenue, energy security and economic development.

She said a successful transition required a clearly defined strategy for NNPCL, including publicly available sustainability plans and assessments of the financial, environmental and social risks associated with its operations.

“The transition that does not include NNPC is not one that is likely to succeed,” she said.

She called for closer collaboration among NNPCL, the ministries responsible for finance and national planning, and other relevant stakeholders to develop short-, medium- and long-term plans for the company’s role in the changing energy landscape.

The NRGI country manager also warned that evolving policies in major export markets, particularly the European Union, could create additional commercial risks for countries and companies with high-emission fossil fuel production.

She said Nigeria needed to assess how such developments could affect the competitiveness of its oil and gas industry and incorporate the risks into investment decisions.

George-Ikoli further raised concerns about the environmental and health impacts of petroleum operations on host communities, calling for stronger safeguards as Nigeria expands its use of natural gas.

She said environmental liabilities arising from the withdrawal of international oil companies from some petroleum assets must be addressed to prevent affected communities from bearing the burden of abandoned responsibilities.

According to her, Nigeria’s energy transition should protect host communities, strengthen institutional accountability and ensure that the benefits of energy development are not undermined by environmental damage.

NUPRC defends Nigeria’s gas strategy

Meanwhile, Bamidele Dada, an official of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), said Nigeria would continue to rely on its abundant natural gas resources as a major component of its energy transition strategy.

Dada said the country supported the global shift towards cleaner energy but would pursue a pathway that reflected its natural resources and development needs.

He noted that the Federal Government had declared 2021 to 2030 the Decade of Gas to encourage greater use of natural gas in power generation, transportation and gas-based industries.

According to him, the policy is intended to support industrial development, expand energy access and meet the needs of Nigeria’s growing population.

Dada said the government was also seeking to increase crude oil production from below two million barrels per day to three million barrels per day by 2030, while targeting natural gas production of 12 billion cubic feet per day.

He added that recent upstream licensing activities were part of efforts to boost production, attract investment and strengthen Nigeria’s position in the African energy market.

However, Dada acknowledged that increased production must be accompanied by environmental protection and sustainable resource management.

He said Nigeria needed to balance its energy supply requirements with the responsibility to protect the environment, adding that sustainable production would help attract the investments required to achieve the country’s energy ambitions.