Government Initiatives in New Offshore Drilling and Development Projects Bolster Nigeria Offshore Oil and Gas Production Market Growth
According to our latest study on "Nigeria Offshore Oil and Gas Production Market Forecast to 2031 – Country Analysis – by Type and Application," the market is expected to grow from US$ 34.18 billion in 2023 to US$ 47.03 billion by 2031; it is anticipated to record a CAGR of 4.1% from 2023 to 2031. Apart from growth drivers, the report covers the Nigeria offshore oil and gas production market trends and their foreseeable impact during the forecast period.
In May 2024, the Nigerian Upstream Petroleum Regulatory Commission relaunched Nigeria's 2024 licensing round at the Invest in African Energy forum in Paris as industry players revealed key investment opportunities. Nigeria's latest licensing round includes 12 deep offshore and shallow water oil blocks, including five offshore blocks from last year's round, and is available for tender until January 2025. Nigeria aims to attract local and international explorers to its acreage to expand its reserve base and maximize production. The country is seeking to accelerate upstream investments with the federal government introducing tax credits for unrelated greenfield gas development and commercial incentives for deepwater oil and gas projects. Leading operators such as Shell, TotalEnergies, and Chevron have announced investments of billions to develop Nigeria's oil and gas supply, coupled with onshore and marginal field opportunities for local and emerging explorers.
Nigeria Offshore Oil and Gas Production Market Share — by Region, 2022
Nigeria Offshore Oil and Gas Production Market Size and Forecast (2021 - 2031), Regional Share, Trend, and Growth Opportunity Analysis Report Coverage: By Type (Crude Oil and Natural Gas), Application (Power Generation, Transportation, Industrial, and Others), and Country
Nigeria Offshore Oil and Gas Production Market Growth 2031
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Source: The Insight Partners Analysis
The Nigerian government launched several major projects aimed at improving energy security and oil refining and gas processing capabilities. Train 7 expansion project at the Nigeria LNG plant will increase Nigeria's LNG production capacity to 30 million tons per year by 2027. Also, the 650,000 bpd Dangote refinery became operational in 2023. Such projects have taken and represented a significant new domestic market for Nigerian crude oil. Thus, government initiatives toward new offshore drilling and development projects fuel the Nigeria offshore oil and gas production market growth.
Based on type, the Nigeria offshore oil and gas production market is bifurcated into crude oil and natural gas. Crude oil produced in the country is majorly used in various sectors, including transportation, residential, commercial & public services, and agriculture. Natural gas is utilized mainly in sectors such as power generation, industrial, residential, and others. The crude oil segment held a larger Nigeria offshore oil and gas production market share in 2023.
Total crude oil and condensate produced in Nigeria accounted for an average of 1.51 million barrels per day in 2023, with 1.25 million barrels of oil and 0.26 million barrels of condensate per day as per the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) report. Major onshore oil and gas producers, including Exxon Mobil Corporation, TotalEnergies, Shell, and Eni, have decided to leave Nigeria's oil-rich Niger Delta in recent years and focus on deep-sea drilling, citing security concerns such as theft and sabotage. However, their exit was delayed by regulatory hurdles. The majors' exit means there are 26 onshore blocks on offer, containing an estimated reserve of 13.76 billion barrels of oil, 2.70 billion barrels of condensate, and about 90,717 billion cubic feet of gas, as per the NUPRC.
The international oil company’s withdrawal from Nigeria does not mean that they are leaving completely. Offshore locations—which lack the security challenges of onshore locations—are becoming increasingly attractive to the major market players. The government's Ministry of Petroleum Resources states about 13 billion of Nigeria's 37 billion barrels of proven oil reserves were in the deepwater sector, which would create an opportunity for the players operating in the offshore oil and gas production market. In December 2023, TotalEnergies announced its plan to invest, with a focus on offshore oil projects and gas production. As per President Tinubu, Nigeria will be the top-level investment choice in the offshore and onshore sectors in the coming years by tackling the obstacles in oil and gas production in the country, which contributes to the growing Nigeria offshore oil and gas production market size.
The scope of the Nigeria offshore oil and gas production market report focuses on Nigeria. The country has been the largest crude oil producer in Africa for many years. According to the Nigerian Upstream Petroleum Regulatory Commission, the total volume of crude oil (including condensate) produced in the country accounted for 552.84 million barrels in 2023. However, disruptions in production outages or unplanned production in the country resulted in declining crude oil production below Angola, which is the second-largest producer in the region. Nigeria faced a decline in oil production during 2008–2010, 2016–2018, and 2022 owing to the recession, militant strikes on oil infrastructure, facility closure & oil worker strikes, respectively.
The Nigerian government is engaged in taking initiatives to increase the production of oil and gas and attract international oil and gas producers to the country. In August 2021, the Nigerian government passed the Petroleum Industry Act. The new act is aimed at attracting investor interest in the upstream development and addressing grievances of communities affected by oil exploration and production. The act changed the legal framework, which includes:
- Formation of two different industry regulators—the Nigerian Upstream Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority
- Restructuring of the Nigerian National Petroleum Corporation
- Reducing the royalty structure and tax for crude oil production
- Modification of terms and conditions in licensing and leasing of oil fields.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) aims to increase the oil and condensate production to more than 2.5 million barrels per day (mbpd) by 2026 from 1.51 mbpd in 2023. Thus, initiatives by the government to boost the production of oil and gas drive the Nigeria offshore oil and gas production market size.
TotalEnergies SE, CNOOC Ltd, Shell Plc, Chevron Corporation, ExxonMobil Corporation, Africa Oil Corp., Nigerian National Petroleum Corporation, Lekoil Nigeria Ltd., Pinnacle Oil and Gas Limited, and Midwestern Oil and Gas Company Limited are among the key players profiled in the Nigeria offshore oil and gas production market report. Companies in the market mainly focus on product and service enhancements by integrating advanced features and technologies into their offerings.
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