GEOECONOMICS OF FOREIGN INVESTMENT IN NIGERIA’S OIL AND GAS SECTOR

Foreign investment in Nigeria’s oil and gas sector is no longer best understood as a simple inflow of international capital into a resource-rich economy. It is now a geoeconomic process shaped by LNG demand in Europe and Asia, portfolio decarbonization by Western oil companies, the rise of African financial institutions, and Nigeria’s effort to compete for capital in a world where investors can choose among Guyana, Brazil, Namibia, Mozambique, Qatar, and the U.S. Gulf Coast. The key issue is not whether Nigeria still has hydrocarbons of scale. It does. The issue is what kinds of capital those resources now attract, and on what terms. Nigeria still has formidable geological depth. The EIA estimates 37.5 billion barrels of proved crude oil reserves and 211.1 trillion cubic feet of proved natural gas reserves in 2024. Yet production performance shows why capital has become more selective. Crude oil and lease condensate output averaged about 1.5 million barrels per day in 2024, roughly 31% below the 2015 average, reflecting theft, vandalism, infrastructure deterioration, and years of delayed upstream spending. In the current global market, reserve size alone does not secure investment. Investors increasingly rank jurisdictions by contracting speed, surface risk, fiscal predictability, monetization options, and carbon intensity. That ranking helps explain where foreign capital is still willing to go in Nigeria. The African Energy Chamber, citing Wood Mackenzie, says Nigeria accounted for three of the four final investment decisions announced by global oil majors in Africa in 2024, totaling $13.5 billion. The projects are revealing. Shell’s Bonga North deep-water development, approved in December 2024, contains more than 300 million barrels of oil equivalent in recoverable resources and is expected to reach peak production of 110,000 barrels per day. TotalEnergies and NNPCL approved the Ubeta gas field in June 2024, a roughly $566 million project expected to produce 300 million cubic feet per day from 2027 by tying into existing facilities. In 2025, Shell also sanctioned the HI offshore gas project to supply 350 million standard cubic feet per day at peak to Nigeria LNG. These are export-linked, infrastructure-leveraged, and lower-surface-risk projects. That is precisely where foreign capital is most comfortable today. The economics of LNG reinforce this shift. NLNG says Train 7 will increase the Bonny Island plant’s capacity by 35%, from 22 million tonnes per annum to 30 mtpa, and that construction is already more than 80% complete. From a geoeconomic perspective, this matters because LNG turns Nigerian gas into a globally priced, dollar-earning asset. It also aligns with an international investment environment in which the IEA sees spending on new LNG facilities remaining strong even as many developing countries struggle to mobilize capital for domestic energy infrastructure. Nigeria therefore attracts capital most easily where it can combine upstream resources with export optionality and established evacuation infrastructure. But foreign investment is not only about new entry; it is also about strategic exit and transfer. Oando completed the acquisition of Eni’s Nigerian Agip Oil Company in August 2024 for $783 million, increasing its participation in key joint-venture assets and lifting its reserve base to about 1.0 billion barrels of oil equivalent. Afreximbank arranged a $650 million financing package for the deal, showing how African capital is becoming more central to energy-asset transfers. Seplat also completed the acquisition of Mobil Producing Nigeria Unlimited in December 2024. Together, these deals show that ownership in Nigeria’s upstream sector is being rebalanced. International majors are narrowing exposure to assets with high surface risk, while indigenous firms and African financiers are stepping into a larger operating role. Policy has become Nigeria’s main competitive instrument in managing both corridors. The Petroleum Industry Act remains the core framework, but recent executive measures aim at execution risk directly. According to the Nigerian Content Development and Monitoring Board, the 2024 presidential directives on local content operations and contracting timelines helped shorten the industry contracting cycle to about six months while reducing procedural touchpoints. In 2025, the Upstream Petroleum Operations (Cost Efficiency Incentives) Order introduced performance-linked tax credits for operators that beat regulator-set cost benchmarks. The message is clear: Nigeria understands that delay is not neutral. In a mobile capital market, delay is an investment deterrent. Still, the constraints remain serious. The U.S. Department of State notes that although 100% foreign ownership is technically permitted in oil and gas, the sector still operates mainly through joint ventures and production-sharing contracts with NNPCL. Oil theft and illegal bunkering persist, local content rules limit expatriate managers to 5% of staff, and divestments can be slowed by consent and approval disputes. Macro indicators also show the gap between project-level success and broad investor confidence. National Bureau of Statistics data show that Nigeria attracted $2.6 billion in total capital importation in Q2 2024, yet foreign direct investment was only $29.83 million, or 1.15% of that total. In other words, Nigeria can still win large energy deals without yet solving the deeper confidence problem. The geoeconomic implication is that Nigeria’s oil and gas future will be determined less by headline reserve numbers than by its ability to match different pools of capital with different asset classes. Foreign investors will stay interested where Nigeria offers export-linked gas, deepwater scale, lower above-ground risk, and faster execution. Indigenous and African capital will become more important in domestic production, asset turnover, and operational continuity. If reforms on security, flaring, contracting, and fiscal administration hold, Nigeria can turn this hybrid model into a durable investment advantage; if they stall, capital will remain episodic and enclave-based.

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