FG says petroleum industry reforms drive economic diversification, energy security

SOPURUCHI ONWUKA (Editor)

Federal government has declared that ongoing reforms in Nigeria’s petroleum industry are steering the sector toward achieving key national economic objectives while aligning with global decarbonization goals, domestic energy security, and economic diversification.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) identified local capacity development, domiciliation of operations, and enhanced utilization of local content as critical regulatory priorities designed to deepen domestic participation and strengthen value retention within the economy.

Speaking at the Offshore Technology Conference (OTC) in Houston, Texas, the Chief Executive of NUPRC, Mrs. Oritsemeyiwa Eyesan, said the industry is undergoing a significant shift driven by the need to maximize value from Nigeria’s hydrocarbon resources.

She explained that a combination of factors is driving improved efficiency across gas commercialization, domestic refining, and power generation. She listed them to include increasing indigenous participation, climate commitments, renewed investment flows, and the gradual revival of the midstream and downstream segments.

A major indicator of renewed investor confidence, according to Eyesan, is the strong response to Nigeria’s 2025 oil licensing round. She disclosed that nearly 300 local and international companies are currently competing for about 50 oil blocks.

“We only have 50 assets, but almost 300 applicants. That tells you the opportunities are significant, and the story will change rapidly,” she said.

Eyesan attributed the surge in interest largely to the implementation of the Petroleum Industry Act (PIA), which she described as a “game changer” that has enhanced regulatory clarity and strengthened investor confidence.

She added that beyond the PIA, the government has remained responsive by continuously reviewing and adjusting fiscal and regulatory frameworks to maintain global competitiveness and attract long-term capital.

She emphasized that the regulator’s approach balances investment facilitation with strict compliance enforcement, creating a more structured and investor-friendly operating environment.

Beyond investment, Eyesan highlighted Nigeria’s environmental commitments, noting that the country is targeting the elimination of routine gas flaring by 2030 and the achievement of net-zero emissions by 2060.

She revealed that gas flaring levels have already declined to below 10 percent due to stricter enforcement measures and the introduction of commercialization policies.

Central to the effort, she explained, is the government’s gas flare commercialization program, which aims to convert previously wasted gas into economic value. According to her, the initiative has the potential to generate up to three gigawatts (3.0 GW) of electricity.

“Today, we are working towards converting those flares into about three gigawatts of electricity. This project is ongoing,” she said.

She explained that the program represents a shift from merely penalizing gas flaring to actively harnessing the resource by allocating flare sites to investors with the technical and financial capacity to convert gas into usable energy.

“We are not just satisfied with the penalties that companies pay for flaring. We are determined to eliminate flaring by commercializing it,” Eyesan added.

She further noted that natural gas will serve as a critical transition fuel in Nigeria’s energy mix, helping the country balance its reliance on hydrocarbons with cleaner energy solutions while also improving electricity access for millions of Nigerians who currently lack reliable power supply.

In addition, she pointed out that recent downstream reforms, particularly the removal of fuel subsidies, are accelerating the adoption of alternative fuels such as compressed natural gas (CNG), especially in the transportation sector.

Also speaking at the conference, the Chairman of the Petroleum Technology Association of Nigeria (PETAN), Mr. Wole Ogunsanya, said Nigeria’s presence at the global event reflects the industry’s commitment to boosting production and strengthening energy security despite ongoing challenges.

He disclosed that the country is nearing one million barrels per day (bpd) in active refining capacity, a development expected to significantly reduce dependence on fuel imports.

However, he cautioned that about 500,000 bpd of installed refining capacity remains idle, highlighting the urgent need for increased upstream investment, improved infrastructure, and deployment of modern technology.

Ogunsanya stressed that achieving Nigeria’s production target of three million barrels per day within the next five years will depend heavily on strategic partnerships, technological advancement, and sustained investment in exploration and production activities.

He added that increasing crude output is essential not only to meet domestic refining demand but also to maintain Nigeria’s quota obligations under the Organization of the Petroleum Exporting Countries (OPEC).

The conference also featured participation from senior executives of major oil companies, including Chevron Nigeria Limited and the Nigerian National Petroleum Company Limited (NNPC Ltd), alongside independent producers, all of whom echoed the importance of sustained reforms and collaboration.

Overall, the strong investor response to the licensing round, combined with ongoing policy adjustments, expanding refining capacity, and a clear energy transition strategy, signals a potential turning point for Nigeria’s oil and gas industry.

With continued alignment between government policies and industry expectations, stakeholders believe Nigeria is well-positioned to reclaim higher production levels, attract long-term global investment, and solidify its role as a key energy hub in Africa while progressing toward a lower-carbon future.