Christopher Okpoko
The performance of the oil and gas sector in the coming years will be influenced by several factors, including:The effectiveness of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in working towards increasing oil production to 2.6 million barrels per day (mbbl/d) by 2026.
The implementation of the government’s Gas Master Plan to establish Nigeria as an African liquefied natural gas (LNG) export hub and to grow gas reserves to 210 TCF by 2025 and 220 TCF by 2030.The government’s commitment to developing the domestic gas market.The commissioning of the Ajaokuta-Kaduna-Kano (AKK) gas pipeline project.The government’s ability to curb oil theft and address security challenges, particularly in the Niger Delta region, along with labor relations.
Plans to conduct a new oil licensing round in 2025, focused on allocating undeveloped blocks to increase crude reserves and production.NNPC’s plan to secure $2 billion to stabilise its finances and invest in new oil infrastructure to boost crude oil production.With the Dangote, Port Harcourt, and Warri refineries already producing fuels and the Kaduna refinery set to begin production this year, a sufficient supply of fuel is assured. This will reduce fuel imports, allow for foreign exchange earnings through exports, and decrease the demand for foreign exchange by fuel importers.
However, ensuring an adequate supply of crude oil to these refineries is crucial.While oil and gas dominate Nigeria’s energy sector, increasing awareness of climate change and sustainability has led both the government and private sector to invest in renewable energy solutions. Solar energy, given Nigeria’s abundant sunlight, presents a particularly promising avenue. Initiatives to harness solar power are gaining momentum, especially in rural areas where electricity access is limited.
It is projected that solar energy could significantly enhance Nigeria’s electricity generation mix, helping to bridge the existing energy gap in the near future. The government has implemented policies to promote solar energy, including the Climate Change Act of 2021 and the Renewable Energy Master Plan (REMP), which aims to increase the share of renewable energy in the country to 23% by 2025 and 36% by 2030, alongside growth in the electrification rate. For solar energy, the REMP sets a target of achieving 500 MW of capacity by 2025. Additionally, several solar farms are currently under development, and off-grid solar initiatives are being pursued to improve energy access.
Despite the progress toward electrification and decarbonization, many challenges remain, solar and renewable energy progress still faces significant pressure due to the lack of robust financing support, an underdeveloped domestic supply chain, insufficient skilled labor, and the fluctuating global political and economic climate.
Nigeria’s ambitious solar plans fizzled out due to the government’s failure to provide essential guarantees to developers. Despite strong demand for clean energy, with small-scale solar systems for homes gaining immense popularity and creating jobs, large-scale developers have been deterred by Nigeria’s reputation as a high-risk business environment.
The outlook for solar energy in Nigeria is promising, with the country’s solar panel market expected to grow in the coming years: President Bola Tinubu at a recent event, announced that his administration will make Nigeria the solar panel and EV Battery Manufacturing hub of Africa. And in response at the centre of Nigeria’s mining awakening, lies the Jupiter Project, Nigeria’s first Tier 1 mining spanning 462 square kilometres of lithium-rich terrain. With a projected investment of $2.5 billion, this project is expected to elevate Nigeria’s global position as lithium powers the world.
Wind and hydroelectric power are also integral to Nigeria’s renewable energy roadmap. The potential for wind energy generation, particularly in northern regions, has yet to be fully realized. Investments in hydroelectric projects like the Mambilla Hydro Power Project signify the government’s commitment to diversifying its energy portfolio.
Furthermore, ongoing partnerships between public and private entities are expected to catalyze growth in the renewable sector. Incentives such as feed-in tariffs and tax breaks for renewable energy projects may encourage greater investment, resulting in an increased share of renewables in Nigeria’s overall energy consumption.
No doubt, Nigeria is beginning to shift toward renewable energy solutions to solve its power generation and distribution issues. A key boost to this transition is a recent $750 million credit from the World Bank, which aims to improve the energy sector. This credit facility offers significant opportunities for public and private sectors to transform Nigeria’s energy landscape.Technological innovation plays a pivotal role in the evolution of Nigeria’s energy landscape. In the next few years, advancements in energy storage, smart grids, and clean energy technologies are anticipated to transform energy management in the country.
These innovations not only enhance efficiency but also address issues related to energy distribution and accessibility.One of the primary challenges facing Nigeria is the high rate of energy poverty, with millions lacking access to reliable electricity.
However, technology-driven solutions, including mobile payment platforms and decentralized energy systems, are making strides in improving energy access. In 2025, the development of microgrids and standalone solar systems is expected to empower millions of Nigerians by providing them with affordable and sustainable energy options.
The influence of digital technology cannot be overstated. Smart meters and automation can facilitate better energy management and monitoring, ensuring supply aligns with demand. Such technologies are instrumental in addressing the inefficiencies currently plaguing the Nigerian energy sector.Despite the optimistic outlook for energy in Nigeria, numerous challenges threaten to impede progress.
Corruption, inadequate infrastructure, and policy inconsistency are persistent barriers that can stifle investment and hinder growth. For instance, the lack of a stable regulatory framework has deterred some foreign investors who view the risks associated with operating in Nigeria as too high.
Moreover, the environmental consequences of oil extraction and gas flaring remain significant concerns, drawing criticism from both local communities and international observers. Striking a balance between exploiting fossil fuel resources and investing in sustainable alternatives will require a robust policy approach that prioritizes environmental protection while fostering economic growth.To address these challenges, the Nigerian government must implement coherent energy policies that promote transparency and protect investor interests. Strengthening collaboration with international organizations and partners can also enhance the technical expertise and funding necessary for infrastructure development.
Additionally, public awareness campaigns highlighting the benefits of renewable energy and energy efficiency are crucial for cultivating a culture of sustainability among Nigerians. Education on the importance of energy conservation can play a vital role in reducing overall consumption and promoting responsible usage of available resources.The outlook for its energy sector is characterized by both promise and challenges.
The country’s oil and gas industry remains crucial to its economy, while simultaneous investments in renewable energy reflect a growing commitment to sustainability. Technological advancements offer solutions to improve energy access, but numerous challenges could impede the sector’s evolution.Ultimately, the trajectory of Nigeria’s energy future rests on the government’s ability to navigate these complexities through strategic policymaking, investment in infrastructure, and a commitment to diversifying its energy sources.
As Nigeria strives to balance resource exploitation with environmental considerations, its energy landscape holds the potential to not only propel economic growth but also contribute meaningfully to the global transition towards sustainable energy practices.