Maximising Nigeria’s Energy Potential

Oyindamola Adeyemi

With Nigeria’s oil and gas industry shifting under recent policy changes and numerous upstream divestments by international oil companies (IOCs), opportunities abound in Nigeria’s hydrocarbon future for indigenous companies. It gives ample room for indigenous companies to participate, bid competitively for projects, have access to industry assets and gain a share of voice within the Nigerian market.

Moreover, the market change could bring prolific avenues for collaboration between indigenous brands and departing international companies. It also creates an opportunity for improved local knowledge of the operational technology by local companies from their international counterparts. However, challenges still abound for the local companies to thrive. Securing capital for asset acquisition and development portends a severe hurdle to leveraging the current divestment.

Local companies must also overcome technical and operational inefficiencies while dealing with a complex regulatory environment. Although the Nigerian local content policy has ensured the transfer of knowledge from foreign experts to indigenous manpower, technical inefficiencies by the local companies could undermine their full potentials and benefits of the ongoing divestment.

The Executive Chairperson of Tirex Petroleum and Energy, Oyindamola Adeyemi identifies securing capital for asset acquisition and development as a major obstacle to fully leveraging the ongoing divestments. Adeyemi also emphasises the fluctuating nature of global oil prices as the biggest challenge for the growth and sustainability of Nigeria’s hydrocarbon industry in the coming years. However, she remains optimistic about the opportunities the sector has propagated amidst the volatility. 

“Three deepwater drilling campaigns are expected to commence between 2025 and 2026 to drive the long-term value of the industry,” explains Adeyemi, “While shallow water projects also present promising prospects.” Furthermore, the shift towards ESG standards, while challenging, also offers Nigerian companies lucrative pathways to new markets, funding opportunities, and long-term sustainability. 

Indigenous companies like TirexPE, with their in-depth understanding of the regulatory environment and its operational complexities, have the inside track on streamlining operations and boosting profitability. Yet, as TirexPE and other energy players press forward, challenges persist.

Adeyemi emphasises the potential synergies from leveraging international expertise alongside local knowledge and operational experience. She sees a unique opportunity for TirexPE to reaffirm its position as a pre-eminent player in Nigeria’s hydrocarbon future. “The recent divestments by international oil giants mark a turning point for indigenous companies like TirexPE. It represents a clear move towards greater local participation and control and presents a dual opportunity and challenge for indigenous brands.” 

This operational prowess is evident in TirexPE’s recent successes. Over the past 18 months, the company has drilled approximately sixteen wells for various customers, marking a substantial contribution to the nation’s oil production. TirexPE has also navigated sectoral challenges by forming impactful partnerships with IOCs and spearheading major drilling projects, such as the Ikike Wells Development and Well Intervention Campaign. “Our focus lies in providing advanced technologies and innovative solutions that will enhance the efficiency of local oil exploration and production processes, especially with the promising opportunities ahead,” says Adeyemi. 

As Nigeria’s leading drilling contractor, TirexPE’s initiatives have not only enhanced production but also bolstered the country’s export capacity and contributed to critical infrastructure development. “Nigeria’s heightened hydrocarbon production capacity necessitates improvements in transmission and distribution networks, development of new fields to explore additional wells, and expansion and maintenance of existing infrastructure,” Adeyemi explains. 

Building on this momentum, TirexPE plans to invest $80 million to $100 million in strategic assets over the next 24 months. By expanding its service portfolio to comprise a broader range of upstream activities, TirexPE is cementing itself as a comprehensive service provider in the country. “We are also investing in the development of our workforce, ensuring that our team possesses the requisite skills and knowledge to manage these assets effectively,” Adeyemi adds. Through extensive skill-building programs, including on-the-job training and specialised courses, the company actively cultivates the potential of the Nigerian workforce. “As a cornerstone of our operations, TirexPE champions local content by building technical capacity that otherwise would not have been available,” she says. In parallel, TirexPE remains committed to community development and knowledge transfer in the Niger Delta, investing in quality education to nurture the nation’s future leaders.

At this landmark juncture, TirexPE remains steadfast in leveraging market changes to meet Nigeria’s escalating energy needs at scale. With the nation’s economic resurgence spotlighting top-performing sectors such as oil and gas, Tirex Petroleum and Energy Limited is strategically positioned to enhance national security, drive local content, and set new benchmarks for innovation and efficiency. Adeyemi concludes, “I urge investors to consider Nigeria, with its unique confluence of opportunities and potential, as a prime destination for new business and investments.”

For the records, Nigeria’s economy remains the largest in Sub-Saharan Africa, with vast natural resources including oil and the continent’s largest gas reserves. 

Nigeria’s hydrocarbon-based economy faces long-term decline. Strategic policy reforms and investments in gas can enable a return to growth. Natural gas offers a transformative opportunity as global markets seek cleaner alternatives to oil. Nigeria is an established oil producer grappling with declining market share and dimming economic prospects – but it could reverse its fortunes if authorities take a proactive approach to exploration and export, namely for natural gas.

The country has the second-largest proven oil reserves in Africa, after Libya. It sits on the 10th-largest proven oil reserves in the world, with roughly 2 percent of global reserves behind Venezuela, Saudi Arabia, Iran, Iraq, the United Arab Emirates (UAE), Kuwait, Russia, the United States and Libya. It is also the oldest sub-Saharan OPEC member country, having joined the producer group in 1971.

For 42 years (1979-2021), Nigeria dominated Africa’s oil production. At its prime in 2010, its production reached 2.5 million barrels per day – equivalent to more than a quarter of the continent’s total output. However, since that peak, due to difficult investment and security environments and producers exiting the country, Nigeria’s oil production has experienced one of the fastest declines in Africa, shrinking at an average annual rate of 5 percent from 2012 to 2022, when Nigeria produced 1 million barrels per day less than its peak volume. That decrease is equivalent to the total oil production of Angola, the second-largest oil producer in sub-Saharan Africa.

Today, Nigeria is the 16th-largest oil producer in the world. A loss in production spells trouble for this oil-dependent economy. Since Nigeria became a significant oil producer in the 1970s, hydrocarbon products have consistently accounted for 90 percent of its exports, according to the International Monetary Fund. In 2023, Abuja announced an ambitious plan to return to growth and surpass historic peak production levels with a new target of 2.6 million barrels per day by 2026. This would translate into a massive increase of 79 percent in just two years (more than adding another Angola-sized producer to global output).

Gas has the potential to transform the country’s future role in global energy markets. Nigeria’s proven oil reserves have plateaued in recent years, but this by no means indicates that Nigeria is running out of opportunities; on the contrary, its deepwater potential largely remains untapped. The necessary exploration and development of such resources, however, will be neither cheap nor fast.

Additionally, in a more climate-conscious world, a solution that could deliver sustained economic growth would be for Nigeria to capitalise on low-hanging fruit – that is, natural gas. Gas has the potential to transform the country’s future role in global energy markets should above-ground factors, particularly government policy, provide the necessary prerequisites for the sustainable exploitation of the resource.

*Adeyemi is the Executive Chairperson of Tirex Petroleum and Energy.