The lack of clarity on its petroleum subsidy policy is raising concern in oil and gas even as it begins to take a toll on investors’ confidence in the sector.

The Fourth Quarter Outlook by the Society of Energy Editors highlighted that the ongoing ambiguity may deter investments needed to stabilising Nigeria’s energy market.

The report pointed out that throughout the first half of 2024, the Nigerian government and the Nigerian National Petroleum Company Limited (NNPC Ltd) repeatedly denied resuming petroleum subsidy payments, despite mounting speculation.

Amid persistent fuel supply disruptions, NNPC Ltd had dismissed reports that it was indebted to petroleum suppliers until it later admitted to owing over $6 billion to its suppliers.

This backtrack has intensified concerns over the transparency and financial health of NNPC Ltd, further eroding investors’ trust.The outlook added that development fund for oil and gas producing communities is expected to progress as operating companies streamline operations in line with the provisions of the Petroleum Industry Act (PIA).

The report pointed out that Nigeria has 14 oil rigs in operation as of August 2024, according to the latest data, which remains unchanged from the previous period and is expected to stay at the same level heading into the fourth quarter of the year.

It added that for context, Nigeria’s oil rig count has historically averaged 10.75 from 1995 to 2024, highlighting the country’s significant fluctuations in drilling activities over the decades.

Nigeria’s oil production is expected to remain volatile due to ongoing challenges in the sector, it said, adding that the country’s oil production has been on a decline, a trend likely to continue unless there are significant reforms in the sector.

Pointing out the challenges in the industry, the report stated: “Investments are at an all-time low and this may remain unchanged in the fourth quarter (Q4), Oil and gas Exploration and Production are at an all-time low and may remain that way in Q4. The NNPC Ltd is not able to take decisions on moving projects along and indications are that this will remain so in Q4.

“Similarly, the NNPC Ltd is not able to ensure the divestment programme of the international oil companies (IOCs) doesn’t negatively impact Joint Venture operations, and this may remain so in Q4. The Ministry of Petroleum Resources is also unable to move stalled projects along and this may remain so in Q4.”