Nigeria has seen a notable increase in its oil rig count, rising from 17 in 2019 to 31 as of last month. The improvement in drilling activities was attributed to the positive impact of the Petroleum Industry Act (PIA). Prior to the PIA, regulatory uncertainty and energy transition efforts led to a decline in investments in Nigeria’s oil and gas industry. However, with the PIA’s enactment, there has been a resurgence in investments, reflected in the rise in rig count. The PIA has repositioned the sector by creating efficient governing institutions and fostering a conducive business environment.
Key Points:
- Investments in Nigeria’s oil and gas industry declined before the enactment of the PIA due to regulatory uncertainty and energy transition efforts.
- This led to a decrease in total annual upstream capital expenditure from $27 billion in 2014 to less than $6 billion in 2022, representing a 74% decrease.
- The average rig count in Nigeria declined from 17 in 2019 to 7 in 2021 but increased to 31 by August 2023, signaling new investments.
- The PIA has created efficient governing institutions and provisions for transparency, accountability, and a conducive business environment.
- Nigeria’s huge gas reserves position it for a significant role in energy transition, with natural gas becoming a key component of the energy mix.
Analysis: The rise in Nigeria’s oil rig count indicates a positive turn for the country’s oil and gas sector, attributed to the effects of the Petroleum Industry Act. The PIA’s provisions for transparency and accountability, along with its creation of efficient governing institutions, are contributing to the sector’s resurgence. Nigeria’s emphasis on natural gas aligns with global efforts toward a more sustainable energy future.
Background: The Petroleum Industry Act (PIA) represents a significant milestone in Nigeria’s oil and gas industry, aimed at enhancing transparency, accountability, and efficiency in the sector. The positive impact on rig count is an encouraging sign for the country’s energy industry. (Published by Market News Nigeria)