FINANCING THE NIGERIAN OIL AND GAS INDUSTRY IN THE ENERGY TRANSITION: CHALLENGES AND PROSPECTS

Abstract

Nigerian Oil and Gas Industry currently faces three major challenges – the energy transition, increasing competitiveness on the continent, and the environmental and social menace of crude oil theft and facilities vandalization, which have further made the cost of producing a barrel relatively higher than the competition globally, coming only behind the USA shale oil production cost. These challenges are the major cause of the dearth of investment and financing in the industry, despite its abundant oil and gas resources, and the pivotal roles these resources play in its economic development and transition from developing to developed economy. This paper therefore prescribed some solutions that can mitigate these challenges: it offered for Nigeria to scale up the ongoing wars on crude theft by involving all stakeholders from host community, the local, state and federal governments, and the industry players- operating and service providers to form an umbrella body that can monitor every corner of the Niger Delta in order to fish out the miscreants. The government should also create a special court system separate from the normal judicial system that will also involve the military to expeditiously and transparently prosecute any culprit brought before them.  The paper also recommended that Nigeria vigorously pursues the full development of its downstream sector of the industry to become the continental hub for refinery and petrochemicals and blue hydrogen, from its vast natural gas for export as part of the transition fuel.  Nigeria also needs to build its banking sectors to be able to secure funds for its oil and gas investments, while the indigenous players are encouraged to work on their corporate governance structure and ESG compliance requirements to attract foreign direct investment into the industry.