By Gideon Osaka
The year 2024 was pivotal for Nigeria, as the nation’s oil and gas sector witnessed many upswings and challenges from the previous year. From policy reforms to groundbreaking projects, some developments in the industry reflected the country’s ambition to diversify its energy portfolio, attract investments, and enhance sustainability. As 2024 grinds to a close, expectations are very high for the sector in 2025. In the following analysis, Valuechain highlights some of the most significant developments that shaped the industry in 2024.
Slow but steady transition to CNG
Many significant developments occurred in 2024 concerning the country’s transition to natural gas as an alternative energy source. To mitigate the impact of the removal of fuel subsidies, the federal government in 2024 made significant strides in the adoption of Compressed Natural Gas (CNG) as an alternative to petrol, with several CNG-backed initiatives spearheaded by the Presidential Compressed Natural Gas Initiative (PCNGi). Several incentives for CNG infrastructure development, including tax holidays and grants for investors were rolled out, part of the component of the palliative intervention directed at providing succor to the masses in view of the hardship caused by the removal of fuel subsidies.
Recognising the need to reduce dependency on fossil fuels, the president mandated that all future vehicle, generator, or tricycle acquisitions by the government and its agencies must utilize either CNG, solar power or electric energy sources. Over 800 CNG buses, 4,000 CNG tricycles, and 100 electric buses are said to have been rolled out, with over 2,500 CNG tricycles expected to follow suit. Several state governments launched CNG-powered mass transit systems, reducing reliance on petrol.
By year-end, over 200 CNG refuelling stations would have been operational nationwide. In the next one year, NNPC through its retail arms, would have launched over 100 CNG sites. Already, Nigerian National Petroleum Company Limited (NNPC Limited), in partnership with NIPCO has developed an Auto-CNG rollout plan for construction of thirty-five (35) CNG stations across the various geographical zones of Nigeria.
There is also the Vehicle Conversion Incentive which the government, in partnership with the private sector, is offering subsidies and financial incentives to help vehicle owners convert their petrol engines to CNG. The government has also announced a payment plan to facilitate the conversion to CNG at “competitive rates.”
Dangote, Port Harcourt refineries & matters arising
In a groundbreaking move poised to revolutionise Nigeria’s energy landscape, the Dangote Refinery was inaugurated a year ago and commenced supply of Premium Motor Spirit (PMS) to the NNPC Limited on September 15, 2024. The event which symbolised the first supply of PMS otherwise called petrol to the domestic market signalled a new chapter in Nigeria’s domestic refining and marked a significant milestone for the nation’s energy sector in 2024.
However, the release of the products to the domestic market did not come without several issues that dominated national discourse during the year.
On the same day that the Dangote refinery launched its first PMS volumes into the market, NNPC Ltd announced a sudden increase in petrol prices by over 100%. While Nigerians were struggling to get over the shock from the increase, it was announced that a litre of the Dangote fuel, if sold in Lagos, was estimated at N950 per litre.
The price hike caught Nigerians off guard, coming as an unpleasant shock to most Nigerians who had anticipated relief from the soaring high costs of PMS with the refinery’s entry into the market. The price increase had a momentous impact on the already challenging inflationary situation and led to some businesses scaling down operations and cutting down their workforce.
Again, the refinery’s entry into the market caused some public disagreements with the industry regulator over-supply and pricing, as well as the continual granting of import licenses to marketers.
The feud between the regulator and Dangote over supplies and pricing rumbled and morphed into another row with independent marketers refusing to buy from the new refinery. The mudslinging also included allegations, that some traders have been buying substandard fuel from Russia, which is blended with other products before being shipped into Nigeria.
Months after the rollout of the much-expected fuel from the Dangote Refinery, the disquiet that the pricing template that accompanied its arrival into the market is far from abating. The debate around Dangote’s petrol pricing continues to gain momentum even as 2025 beckons.
Barely two months after the Dangote refinery commenced PMS supply to the domestic market, the NNPC Ltd in November announced it had re-streamed the Port Harcourt refinery, signalling the commencement of crude oil processing from the plant and delivery of petroleum products into the market. Trucks immediately began loading petroleum products, which include petrol, diesel, Kerosene, and other product slates from the refinery.
Valuechain reports, however, that the flag-off of operations at the refinery generated controversy amidst doubts in some quarters over the functioning of the refinery, but NNPC maintained that reports insinuating the shutdown of the refinery were totally false, insisting that the plant was “fully operational.”
Oil Production boost FID on major oil projects
Nigeria’s oil production hit its highest level this year in November with a total output of 1.8 million barrels per day (bpd) of crude oil and condensate, according to the NNPC Ltd, who are poised to ramp it up to 2 million bpd by the end of 2024.
Production rose in November by over 13 % compared to the 1.5 million bpd output in the same month of 2023, according to data from the monthly output report by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
The recovery of Nigeria’s oil production came as good news for the 2025 budget based on the 1.7 million bpd of oil production and oil prices at $75 per barrel. The jump in production has been due to authorities ramping up security measures at oilfields to crack down on pipeline theft and sabotage.
…Shell’s FID on $5bn Bonga North Deep-water project
In a major step towards boosting oil and gas production, Shell announced on December 16 a final investment decision (FID) on Bonga North, a deep-water project off the coast of Nigeria.
Bonga North is Nigeria’s first deep-water oil project in over a decade, marking a significant step forward in expanding the nation’s offshore production capabilities.
The Bonga North oilfield, located 130 kilometres offshore in Oil Mining Lease (OML) 118, represents an impressive estimated $5 billion investment and is expected to yield approximately 350 million barrels of crude oil.
The FID signalled renewed confidence in Nigeria’s energy sector and demonstrated the government’s strategic focus on engendering a robust and competitive investment climate.
…NNPC/Total FID on $550m Ubeta field
Earlier this year, the Ubeta oilfield, the first blueprint project under the government’s initiative of spurring investment in the sector, achieved a Final Investment Decision (FID).
In a major step towards boosting oil and gas production, the NNPC-TotalEnergies JV in June, officially announced the $550 million FID on the Ubeta Field Development Project.
The Ubeta field discovered in 1964, North-West of Port Harcourt in the eastern part of the Niger Delta will, once on stream, produce about 350MMScf/day of gas and 10,000 BBLS/day of associated liquids.
Located in OML58, the Ubeta gas condensate field will be developed with a new 6-well cluster connected to the existing Obite facilities through an 11km buried pipeline. Production start-up is expected in 2027, with a plateau of 300 million cubic feet per day (about 70,000 barrels of oil equivalent per day including condensates). Gas from Ubeta will be supplied to NLNG.
With both blueprint projects (Bonga & Ubeta) now achieving FID, the success of these initiatives underscores the effectiveness of the government’s strategic vision for Nigeria’s energy future.
Onslaught against oil theft, pipeline vandalism
The year 2024 saw an increased onslaught against crude oil theft and pipeline vandalism which reportedly yielded improved growth in the nation’s crude oil production to a new peak which hasn’t been seen in the last three years.
This is clearly related to the sustained efforts by the armed forces and other security agencies to protect critical assets, particularly the pipeline infrastructure in the Niger Delta.
The Presidential mandate to mitigate security-related challenges affecting the nation’s crude oil production led to the deployment of advanced security and surveillance monitoring, coupled with collaborations with private security outfits and local communities, which led to a 40% reduction in crude oil losses.
The recent increase in crude production which now averages 1.8 million barrels per day compared with 1.3 million (bpd) in March, has been attributed to the improved security measures.
African Energy Bank finally a reality, Nigeria hosts HQ
Two years after the signing of the founding protocol, and requisite charter for its establishment, the African Energy Bank (AEB), came to life on June 4, 2024, with plans to start full operations later in the year. Structured as a Pan-African energy development bank, AEB is a partnership between the African Export-Import Bank (Afreximbank) and the African Petroleum Producers Organization (APPO), with planned participation from, national oil companies, and African investors as shareholders. The new institution is expected to provide financing for projects that international lenders are shunning for reasons related to energy transition.
The announcement of the full take-off of the Bank was solidified later on July 4, 2024, with the decision to site the Bank in Nigeria; a resolution that has been described as a transformative moment for the continent’s energy landscape. The decision to site the headquarters of the Bank in Nigeria was made during the 45th Extraordinary Session of the APPO Ministerial Council chaired by the Minister of Hydrocarbons of the Republic of Congo Mr. Bruno Jean Richard Itoua.
Nigeria emerged as the preferred host nation amid stiff competition from Ghana, Benin, Algeria, South Africa, and Cote d’Ivoire. The thorough selection process underscored the careful consideration of Nigeria’s capabilities and strategic importance.
Big ticket projects make progress
Aside from the gigantic Dangote refinery which kicked off PMS production and sales, many big projects hit major milestones in the year 2024 despite significant construction delays.
For instance, major segments of the $2.8 billion Ajaokuta–Kaduna–Kano (AKK) gas pipeline project were completed this year as the NNPCL has expressed confidence the project will be delivered by the first quarter of 2025. The 40-inch by 614 km AKK pipeline is the first phase of the 1,300km Trans-Nigerian Gas Pipeline and a key element of Nigeria’s plan to develop its gas resources.
The Assa North-Ohaji South Gas processing plant was one of the three critical gas infrastructure projects commissioned in May 2024, in a move to leverage the country’s huge gas reserves to boost the economy. The 23.3km, 36-inch Gas Pipeline from the Assa North-Ohaji South (ANOH) Primary Treatment Facility to the OB3 Custody Transfer Metering Station in Rivers State aims to improve the availability of natural gas for power generation whilst accelerating Nigeria’s transition towards cleaner fuels.
The gas processing plant will process non-associated gas from the Assa North-Ohaji South field in Imo State, producing dry gas, condensate and LPG. This will significantly increase the domestic gas supply, leading to increased power generation and accelerated industrialisation.
Also, the Nigeria-Morocco Gas Pipeline project progressed steadily, with several international partners joining the venture. In the course of the year, a memorandum of understanding on the Nigeria-Morocco gas pipeline project (NMGP) was signed by NNPC Limited, the Moroccan Office of Hydrocarbons and Mines (ONHYM) and the Economic Community of West African States (ECOWAS) signalling the take-off of the project with a final investment decision expected in early 2025.
The proposed US$25bn 5,600 km gas pipeline project connecting 13 countries, when completed, will provide gas from Nigeria to the West African countries up to Morocco and subsequently to Europe.
In June, Nigeria LNG Limited disclosed that the $4.3bn Train 7 gas project on Bonny Island, Rivers State, had reached 67 per cent completion. The company noted that the project was already delivering on one of its benefits with over 9,000 Nigerians working on the project, and numerous indirect jobs and businesses emerging and booming as a result of the construction.
The Train 7 project is expected to increase NLNG’s production capacity by 35 per cent from the current 22 million tons per annum (mtpa) to 30mtpa.
Another notable development within the gas space during the year was the official issuance of the “License to Construct” (LTC) for Nigeria’s first Floating Liquefied Natural Gas (FLNG) facility to UTM FLNG Limited. The granting of the license opened a new economic chapter for Nigeria in the global gas market.
The UTM Offshore Limited FLNG plant with a capacity of 2.8 million tons per annum (MTPA), will produce Liquefied Natural Gas (LNG), LPG, and condensate from re-injected gas at the OML 104 Yoho Field. The issuance of the LTC by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in September represented a significant step forward in Nigeria’s energy sector. The project is projected to come on stream by Q1 2026 and is reportedly backed by a $5 billion loan signed with Afreximbank.
Presidential Directives (PDs)
Another year into the implementation of the Petroleum Industry Act (PIA) saw the passing of some key implementation milestones. On 28 February 2024, the president signed three Executive Orders as part of the government’s commitment to improve the investment climate and position Nigeria as the preferred investment destination for the petroleum sector in Africa. The three Orders included the Presidential Directive on Local Content Compliance, Presidential Directive on Reduction of Petroleum Sector Contracting Cost and Timelines, and the Presidential Directive on Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.).
The Presidential Directives reinforced the government’s commitment to fast-tracking regulatory approvals, reducing operational costs, and introducing competitive fiscal incentives.
These directives, which aim to enhance regulatory clarity, accelerate project timelines, and incentivise investment in Nigeria’s energy sector, have yielded remarkable results as they were said to have eliminated middlemen from the oil and gas industry value chain and contributed to shortening the oil industry contracting cycle to six months.
A year of divestments
The trend of sales by the oil majors of sizeable stakes in Nigerian assets continued with some notable deals consummated in 2024.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in October, announced the approval of the assets sale of Mobil Producing Nigeria Unlimited (MPNU) to Seplat Energy Offshore Limited, Equinor Nigeria Energy Company Limited to Project Odinmin Investments Limited, Nigerian Agip Oil Company Limited to Oando Petroleum and Natural Gas Company Limited and TotalEnergies EP Nigeria Limited to Telema Energies Nigeria Limited. The sales were concluded after years of regulatory approval delays.
Although the divestment of Shell’s assets to Renaissance could not scale the regulatory test, the interest expressed by Shell in divesting from onshore fields in Nigeria remained strong.
In recent years, international oil companies (IOCs) in Nigeria have been divesting significant portions of their onshore and shallow water assets as part of a broader retreat by the oil majors as they focus on newer, more profitable operations and renewable energy projects. The trend is accelerating as the international firms, though not entirely leaving Nigeria, are focused on deep-water projects in Africa’s largest oil producer.
The developments in Nigeria’s oil and gas sector in 2024 reflected a dynamic interplay of policy reforms and global energy trends. As the country continues to navigate the challenges of energy transition and economic diversification, these milestones underscore the country’s sector resilience and potential to remain a key player in the global energy landscape.