The oil and gas landscape in Nigeria and other African countries is undergoing significant changes amidst faltering global commitments to address the climate crisis. The ongoing divestments and renewed investments across the continent and in developed nations highlight underlying issues that the world continues to overlook. In this article, KINGSLEY JEREMIAH examines the challenges.
Climate activists and supporters of Drill, baby, drill! are at war, not only in the United States where the Presidency of Donald Trump has introduced a new twist but in Africa where many leaders are getting more courageous on their stand for more oil exploration.
Drill, baby, drill! became prominent after it was used in the US in 2008 in support of more exploration of oil and gas by former Maryland Lieutenant Governor, Michael Steele and afterwards by Republican vice presidential nominee, Sarah Palin during a vice-presidential debate.
On November 5, at about 8:59am at the African Energy Week in Rogge Bay, Cape Town, the Executive Chairman of the African Energy Chamber, NJ Ayuk barely said a word after climbing the stage for his welcome address before climate activists interrupted proceedings, urging an immediate end to fossil fuel expansion. While the activists had threatened and asked for the cancellation of the event, three of them found their ways into the conference, which is possibly the largest gathering of energy experts and organisers in Africa. Rising from the crowd to display placards while calling for an end to oil and gas exploration across Africa, the conference, for about five minutes, became rowdy as security officials struggled to dislodge the protesters.
Ayuk, with the fervor of a lion ready to strike, abandoned his prepared speech to passionately defend his stance as Africa’s leading advocate for oil and gas exploration.
“Africa should not have to beg for food from countries like Ukraine while sitting on resources capable of ensuring food security,” he declared. “We need oil and gas to drive our development, support agriculture, and produce fertilisers. It is unjust to stigmatise Africa as a climate criminal when all we are doing is striving to lift our people out of poverty. It’s a journey of energy independence for this continent.
“Africa should not be the scapegoat for climate problems it didn’t create. When Europe and other nations are scrambling for natural gas, why is Africa discouraged from utilising its own to power its people?”
Throughout the programme, climate activists seemed to have inadvertently swayed many attendees towards supporting oil and gas interests. Members of various energy associations, along with global stakeholders, highlighted Africa’s worsening energy access crisis. They called for a focus on developing a Pan-African energy infrastructure, harmonising regulations, securing funding, and banning the importation of crude oil and gas, among other critical issues.
Few days after the conference, the 2024 United Nations Climate Change Conference or Conference of the Parties started in Baku, Azerbaijan. Instead of silencing oil lobbyists like those at the African energy week, most African leaders returned home disappointed as their expectations to push for $1.3 trillion yearly climate finance was reduced to $300 billion for developing countries.
At COP29, African leaders and other developing countries called for $1.3 trillion climate finance yearly from 2025 to help address the growing challenges of climate change. Sadly, they only get $300 billion per year. This is grossly inadequate for Africa to effectively tackle climate impacts and extreme weather events. If inflation averages five per cent a year across the continent over the next decade, this amount would shrink to just $175 billion in today’s terms by 2035. Already, African countries pay $163 billion yearly in debt servicing to the global north, primarily through interest payments.
The threat that developed countries may not even get anything due to Trump’s government also became another trigger at the conference. A senior campaigner at the charity War on Want, Dr. Leon Sealey-Huggins said “threat of the Trump presidency [was] being used” to try to convince developing nations to agree to a finance deal, exposing shortcomings in developed nations’ approach to multilateralism.
“People [were] saying: ‘Well, you better take this money, because when Trump comes, you’re not going to get any money’. And I think that’s a damning indictment of the failure of the political systems in the global north to appreciate that you can’t have a global climate response without global climate justice.”
This reality tends to justify the push by organisations like the African Energy Chamber, African Petroleum Producers Association (APPO) and the African Refiners and Distributors Association (ARDA) that stood their ground for Africa to drill more oil and in fact launched the African Energy Bank along with AfreximBank to edge the funding war from developed countries.
Why Africa Is Pushing Harder Towards Oil, Gas
A pan-African research network, Afrobarometer, reveals that unemployment, health, and education are the most pressing issues facing Africa today. Firewood and charcoal is still a major source of cooking for many and aligning with climate change goals did not make the list of the pressing issues on the continent. Across the 34 African countries where the survey was carried out, unemployment ranks as the top concern for Africans aged 18 to 35 in every nation. Health follows closely, with one-third (33 per cent) of respondents listing it among their top three priorities, while education ranks third at 29 per cent.
Africa is home to a large share of the 3.5 billion people worldwide without reliable electricity access, leaving them especially vulnerable to soaring energy and food prices. Over 600 million lack electricity.
In Nigeria, low oil production that has been witnessed in the last one decade has brought the country to serious debt, soaring energy prices from subsidy removal, which became inevitable for the government to save the country’s economy from total collapse and a repeated collapse of the electricity grid from gas shortage and transmission infrastructure that the government cannot maintain. As oil production slows down, revenues from oil and gas plummeted, gas fired power plants generation went below their capacity, major gas companies like Nigerian LNG have their output reduced by almost half and new gas projects could not progress because of lack of feedstock. New refiners like Dangote Refinery could not find crude from the domestic market and had to turn to countries like the US for crude.
With stringent rules on financing fossil fuels and the cascading impacts on foreign exchange for an import dependent economy like Nigeria, inflation went from eight per cent in December 2014 to 9.6 per cent in 2015. It soared in 2016 to 18.6 and moved to a 30-year high of 34.6 per cent in November 2024 up from 33.9 per cent in the previous month.
People like the Secretary-General of the African Petroleum Producers Organisation (APPO), Dr. Omar Farouk Ibrahim, who led the creation of the African Energy Bank, believes that African countries do not need the Western region to develop its energy sector, stressing that the narrative around renewable energy is flawed and only favours the developed countries
“In 2008, Africa was producing 12 per cent of crude per day while in 2022, Africa was producing seven per cent. So, the production decreased mainly because of lack of investment not because of not enough reserves; so that is showing us the critical situation of investment in Africa oil sector and we need to invest, though while we have the challenges, we also have opportunities,” he said.
Although universal access to affordable and reliable electricity is a fundamental goal of the UN’s Sustainable Development Agenda, framing it as a basic human right, but nearly 600 million Africans lacked access to electricity before the pandemic, and the International Energy Agency reported that in 2020, progress in expanding access was reversed, with about 30 million people losing the ability to afford electricity despite having had access before.
Africa boasts a youthful and dynamic population. According to OPEC’s World Oil Outlook, the Middle East and Africa region is projected to become the global population leader by 2045, with an expected addition of 723 million people from 2022 to 2045. At the same time, the continent houses five of the top 30 oil-producing countries, and its proven oil reserves reached approximately 119 billion barrels by the 2022. The implications are that without investment in fossil fuel and energy access; unemployment, industrial growth and economic crisis will escalate on the continent.
For most African leaders, if there is anything that the Russia and Ukraine war achieved in the energy sector, it was the fact that while the climate crisis is real, developed countries will choose energy security over climate change. They are willing to bend backward when energy security becomes a challenge and they do.
Apart from looking for gas across the world, particularly in Africa, many national oil companies from developed countries are investing more in oil even in their own countries.
Despite earlier concerns about strict North Sea regulations dampening interest in oil and gas, European oil majors such as Shell, Equinor, and BP in 2024 continued to invest heavily in fossil fuels. Shell and Equinor, who divested from Nigeria, have launched a new joint venture for North Sea operations, while BP has partnered with Japan’s Jera in a deal worth up to $5.7 billion to focus on oil and gas assets while also expanding offshore wind projects in the UK and beyond.
The World Energy Investment 2024 outlook of the International Energy Agency (IEA) showed that although investment in renewable generation of the European Union totalled almost $110 billion, an increase of more than six per cent from the previous year, there was ongoing growth in oil and gas investments in 2023.
Data from the U.S. Energy Information Administration showed that the United States averaged crude oil production was 12.9 million barrels per day (b/d) in 2023. By implication, while the President Joe Biden administration was seen as pro-climate change, the U.S. produced more crude oil than any nation at any time during his administration and broke the previous U.S. and global record of 12.3 million b/d, set in 2019.
Germany is not left behind. With coal consumption at 19 per cent of its energy mix in the first half of 2024, Germany had to reactivate some coal-fired power plants to help with energy supply.
Oil Investment Surging In Africa In A New Transition, How Far Can It Go?
Across Africa there is a strong withdrawal of IOCs. In Nigeria alone, Shell divested $2.4 billion to Renaissance Africa Energy, TotalEnergies had divested over $900 million to Chappal Energies; Eni divested over $800 million worth of assets to Oando. ExxonMobil’s $1.3 billion sale to Seplat Energy and Equinor’s $1.2 billion divestment to Chappal Energies are pointing to the readiness of African investors to control their assets. The recoverable oil from these reserves stand at about 2,325 million barrels of crude oil, showing that the about 100 years of IOC dominance is nearly at an end and the sector is moving towards a $2 trillion value opportunity for national players and investors.
Like Nigeria, Panoro Energy has acquired all of Tullow’s assets in Equatorial Guinea and the Dussafu asset in Gabon for $180 million. Similarly, Savannah Energy finalised a $407 million acquisition of ExxonMobil’s upstream and midstream businesses in Chad and Cameroun. Another completed transaction involved ETU Energias, which acquired Galp Energia’s stake in offshore Angola for $443 million. In Gabon, Assala Energy successfully acquired Shell’s onshore assets for $628 million. Apex also completed a $45 million deal, acquiring six concessions from the International Egyptian Oil Company.
These transactions highlight diverse regional activities across West, Central, and North Africa, focusing on mature oil fields, LNG developments, and exploration opportunities.
The deals reflect progress in unlocking Africa’s indigenous oil and gas potential. These developments signal significant investment opportunities and challenges, such as regulatory processes and geopolitical factors that continue to shape the energy landscape across the continent.
Unlike before, Qatar, the UAE, Malaysia, and Chinese NOCS this year acquired stakes in Egypt, Mozambique, Namibia, Kenya, and South Africa. While Namibia has become a hotspot for oil investment, Cape Town based Rhino Resources Ltd has commenced drilling its first exploration well, Sagittarius-1X, in Namibia’s Orange Basin, targeting a promising prospect. The well, located in Petroleum Exploration Licence (PEL) 85, is near significant discoveries by Galp Energia and Shell. Drilled by the Noble Venturer in 1400-meter-deep waters, the operation is expected to last 45 days. Most African led service companies are also playing critical roles in the development of the oil sector in Namibia.
In Angola, there is a new Incremental Production (IP) law to attract investments into the aging oilfields. Many of these are over 20 years old and have produced more than 70 per cent of their reserves. Enacted on November 20, the legislation aims to sustain oil production above one million barrels per day by incentivising enhanced recovery projects. The law addresses challenges posed by the high government take of 80 per cent to 90 per cent on mature fields, which had previously hindered ongoing production and new developments.
Africa’s upstream Capital Expenditure trends for 2022–2030 contained in the African Energy Chamber outlook for 2025 showed that CAPEX reached $47 billion in 2024.
Nigeria dominates CAPEX across all years, averaging approximately $10–12 billion yearly. This makes it the largest upstream spender due to its mature oil fields in the Niger Delta and offshore blocks. Other major contributors include Angola, Algeria, and Mozambique, with each country allocating around $6–9 billion yearly, driven by sustained production and LNG developments. Meanwhile, Libya and Egypt maintain moderate CAPEX levels of approximately $3–5 billion yearly, reflecting gradual investment recovery and a focus on gas-heavy operations. Emerging players such as Namibia, Mauritania, and Senegal start receiving noticeable investments post-2025, with annual allocations rising to $1–3 billion, indicating increased offshore exploration activities. Smaller contributors like Côte d’Ivoire, Gabon, and Tanzania see marginal CAPEX allocations, remaining below $1 billion annually throughout the period.
The overall CAPEX grows steadily from $30 billion in 2022 to approximately $50 billion in 2024, reflecting post-COVID recovery and renewed upstream activity. However, CAPEX stabilises post-2026 at around $55 billion yearly, which aligns with oil price stabilisation and potential shifts in investor priorities toward renewables and gas projects. The regional expansion is evident as countries like Namibia and Senegal highlight the opening of new frontiers, especially in deepwater exploration.
West Africa maintains dominance, with annual CAPEX ranging between $30–35 billion due to the contributions of Nigeria and Angola. This reflects the region’s mature fields, large-scale reserves, and ongoing investments in offshore blocks. North Africa, led by Algeria, Libya, and Egypt, contributes $10–15 billion yearly, benefiting from its proximity to European markets and an increasing focus on natural gas. East Africa experiences gradual growth, with CAPEX rising from $2–3 billion in 2022 to $5–7 billion by 2030, fueled by major LNG developments in Mozambique and Uganda’s oil projects. South Africa remains the smallest contributor, with CAPEX under $1 billion yearly, highlighting its limited upstream activities compared to other regions. Total yearly CAPEX for Africa stabilises around $50–60 billion by 2026, with a growing focus on gas-heavy projects.
Oil Theft, High Production Cost, Economic Shocks Cloud Positive Outlook
Geopolitical uncertainty, as seen in Libya, poses significant risks to investments. Infrastructure deficits, such as limited pipelines, ports, and refineries, increase operational costs in several regions. Additionally, environmental challenges, including oil spills, gas flaring, and deforestation, raise compliance and reputational risks for operators. Countries with high CAPEX allocations, such as Nigeria, need to enhance regulatory efficiency, reduce oil theft, and improve infrastructure to maximise investments. Smaller producers like Côte d’Ivoire and Senegal should adopt competitive fiscal terms to attract foreign direct investment for exploration and production.
Simultaneously, regional governments must balance upstream CAPEX with investments in renewable energy and climate resilience to meet global decarbonisation goals.
Countries like Nigeria and Angola heavily depend on CAPEX-driven revenue, which underscores the need for economic diversification to reduce vulnerability to oil price shocks. Growth in gas projects positions East and North Africa to benefit as natural gas serves as a transitional energy source. These regions leverage existing reserves to meet the growing global demand for LNG. With finance becoming a critical issue, African countries need to save more from the window they have to explore oil. There is a need to implement reforms to curb inefficiencies and drive down costs. In this situation, Nigeria is a classical example of how not to produce a barrel of oil.
The cost of producing oil in Nigeria has surged to $48 per barrel, the highest globally, despite a pledge by the NNPCL to reduce it to $10. This sharp increase has been driven by inefficiency, corruption, dual regulatory challenges, high logistics costs, and rising overheads, leading to significant revenue losses for the country. With insecurity, oil theft and corruption, some operators are losing as much as 90 per cent of their output.
according to the Chairman of the Independent Petroleum Producers Group (IPPG), Abdulrazaq Isa. Some operators have abandoned pipelines and adopted tankers to lift their output to reduce losses in the face of theft.
In the first half of 2024, Nigeria spent $11.4 billion on operating costs to produce 235.9 million barrels of crude oil, generating $19.5 billion in revenue. This means that 58.46 per cent of oil revenue was consumed by production costs. Comparatively, oil-producing nations like Saudi Arabia, Angola, and Libya maintain much lower production costs, ranging from $1 to $20 per barrel.
For instance, in January 2024, Nigeria produced 44.02 million barrels of oil at an average price of $80.12 per barrel, earning $3.5 billion. However, $2.1 billion, or 60 per cent of revenue, was spent on production. By June, with an average output of 38.4 million barrels and oil priced at $81.75 per barrel, production costs accounted for 61.29 per cent of total revenue.
These inefficiencies have raised concerns among stakeholders, who argue that reducing production costs to $10 per barrel, as initially targeted, could significantly increase Nigeria’s earnings. For example, the $3.3 billion borrowed by NNPCL from AfreximBank earlier this year could have been saved if production were more efficient.
Energy expert, Dan Kunle, has highlighted the rising logistical costs of deploying hydrocarbon production facilities in Nigeria, a trend that has worsened since the COVID-19 pandemic. He noted that this development has eroded Nigeria’s competitive advantage in average production costs per barrel.
Kunle expressed concern over what he described as the unrealistic expectations of achieving a production cost of $10 per barrel, a target often discussed by industry managers.
“Achieving that goal requires more than just financial resources; it demands integrity, high-level managerial skills, and honesty, all of which are significantly lacking in Nigerian government-owned oil companies,” Kunle stated. He warned that Nigeria is losing its competitive edge in the oil and gas sector to other players in Africa and the United States. “The golden era of oil is fast fading in Nigeria, giving way to agriculture and other sectors,” he added.
Between December 30, 2023, and March 2024, oil theft in Nigeria surged, with breaches on oil assets increasing from 157 weekly cases to as high as 354 by February 9, 2024. Monthly, theft incidents averaged around 1,337 cases, despite several reported arrests and security efforts involving Tompolo, the Army, Navy, and NSCDC.
Amid these challenges, Nigeria managed to improve oil production slightly. From 972,394 barrels per day (bpd) in August 2022, production rose to 1.014 million bpd in October and peaked at 1.47 million bpd in February 2023. However, output declined to 1.2 million bpd by March 2024 and in October 2024, Nigeria’s oil production experienced a slight decline, dropping from 1.54 million barrels per day (bpd) to 1.53 million bpd.
Professor of Petroleum Economics and Policy Research, Wunmi Iledare, sees the handling of security challenges in the Niger Delta as being quite illusive.
“It is so conjectural as to the expediency of contracting a private security outfit with no experience to manage the challenges effectively.
“Of course, the hope was that the knowledge of the terrain by that security outfit might help, but the drive for oil theft in the Niger Delta seems more driven by greed, wickedness, and criminality than social injustice,” Iledare said.
Ending Mismanagement, Diversifying Economy And Integrating Energy Infrastructure
As loud as Africa is becoming in pushing for continuous use of fossil fuel, it will be disastrous for leaders and operators across the country if the window of energy transition is misused as in the past. According to the Nigeria Extractive Industries Transparency Initiative (NEITI), Nigeria generated a total of $394.02 billion in revenue from the oil and gas sector between 2011 and 2020. A breakdown of the data shows that oil revenue was $20.43 billion in 2020, $34.21 billion in 2019, $32.62 billion in 2018, and $20.98 billion in 2017. The lowest revenue within the decade was recorded in 2016, at $17 billion. In 2015, oil revenue stood at $24.79 billion, while the country earned $54.55 billion in 2014, $58 billion in 2013, and $62.84 billion in 2012. The highest revenue within the period was recorded in 2011, when Nigeria earned $68.44 billion from the oil and gas sector.
Nigeria’s public debt has surged to N134.3 trillion ($91.3 billion) in the second quarter of 2024, marking a 10.35 per cent increase from the first quarter. In contrast, the nation’s debt stood at N6.91 trillion in 2011.
The Nigerian government recovered over $700 million (N288 billion) in stolen funds hidden in foreign countries, including the United States, the United Kingdom, Switzerland, and Ireland, over the past four years, according to former Attorney General, Abubakar Malami. He noted that Africa loses $148 billion yearly to corruption, partly due to illicit financial flows (IFFs).
For context, Nigeria has reportedly lost $582 billion to corruption since its independence in 1960, according to YIAGA Africa.
While Nigeria and other African countries experienced oil wealth, they watched their counterparts like Russia, Norway, Saudi Arabia diversify and reinvest their wealth while leaders in Africa got wasteful. The sad reality is that while the continent has limited resources and windows for energy transition, they are not acting with a level of urgency that the developed countries are planning a series of taxes on fossil fuels.
Although Africa is a major oil producer, most refineries in Africa are struggling to find crude oil because the market has been export driven. Indeed, while countries across Africa also produce Liquefied Petroleum Gas and Liquefied Natural Gas, the infrastructure compatibility across the port becomes a major challenge even as regulations, specifications, currency issues and logistics issues create a barrier.
ARDA and APPO have urged Africa’s 54 countries to end the dollarisation of petroleum products and invest in integrated infrastructure to achieve energy security, reduce dependency on developed nations, and stabilise their economies.
President of ARDA, Mustapha Abdul-Hamid, highlighted the need for harmonised petroleum specifications across the continent to facilitate intra-African trade. He also called for collaboration among regulatory bodies, national oil companies, and governments to create unified strategies for energy production and distribution. Abdul-Hamid commended Ghana’s policy requiring the use of locally refined fuel for oil extraction, noting its positive impact on domestic refinery output.
APPO Secretary General, Ibrahim underscored the importance of building robust infrastructure within Africa to reduce reliance on foreign markets. He warned that dependency on imports exposes African countries to international sanctions and supply disruptions.
Chief Executive of Ghana’s Association of Oil and Gas Marketing Companies, Riverson Oppong, criticised Africa’s paradox of exporting crude oil while lacking refined products for domestic use. He noted that nearly 90 per cent of Africa’s crude production is exported, perpetuating a cycle of exporting raw materials and re-importing finished products, which undermines economic stability and energy security.
“During a recent visit to Morocco, I saw a refinery capable of processing 550,000 barrels per day, sitting idle like a ‘white elephant.’ Why are we sending our crude oil to Europe to be refined, only to bring it back to Africa at a premium?” he asked.
