Lokpobiri unveils vision for Nigeria’s oil sector growth

Senator Heineken Lokpobiri, Nigeria’s Minister of State for Petroleum Resources, addressed a distinguished gathering of the oil producers trade section (a group by the five oil giants operating in Nigeria) at the Cross Industry Group (CIG) meeting  in Istanbul, Turkey.

Presenting a strategic plan to navigate the challenges and opportunities within Nigeria’s petroleum industry. Lokpobiri underscored the sector’s central role in Nigeria’s economy, providing around 85% of government revenue and serving as a vital source of foreign exchange. As the global landscape shifts towards cleaner energy, he emphasized the necessity for Nigeria’s oil and gas sector to remain resilient, competitive, and profitable.

The Minister outlined Nigeria’s dual approach to ensure the future of its petroleum industry by focusing on maximizing crude oil production and adapting to a cleaner energy transition. “In the short term, our focus remains on increasing revenue from crude oil production,” Lokpobiri stated, affirming the government’s commitment to addressing operational bottlenecks and upgrading infrastructure. Recognizing the urgency of cost reduction, he highlighted government measures aimed at streamlining operations, particularly upstream activities, to remain competitive in a fluctuating global market.

A significant part of the government’s vision involves balancing energy demands with environmental considerations. Lokpobiri noted, “The world is moving toward cleaner energy, and Nigeria must be part of that transition.” The government has prioritized natural gas as a cleaner alternative while actively exploring renewable energy options to diversify Nigeria’s energy mix. The Minister extended an invitation to industry players to embrace investment in cleaner, more sustainable methods, stressing that Nigeria’s transition will remain pragmatic and focused on local priorities.

Acknowledging the persistent security challenges in the Niger Delta, the Minister reported ongoing efforts to protect Nigeria’s oil infrastructure through enhanced security measures. “We are engaging communities and encouraging partnerships that  foster local ownership of critical assets,” he said. Efforts include increased military support, particularly from the Nigerian Navy and Joint Task Force (JTF), combined with community engagement and economic empowerment initiatives to combat pipeline vandalism and oil theft. The government has also implemented technology-driven solutions, including drone and satellite surveillance, to enhance the security framework and detect potential threats to the industry.

The Minister noted the comprehensive package of reforms and incentives to revitalize Nigeria’s oil and gas sector, aiming to attract greater investment and stimulate economic growth. “Key elements include the VAT Modification Order 2024 and the Tax Incentives Order for deep offshore oil and gas production, offering fiscal benefits to companies involved in the sector. In addition, directives focus on reducing contracting costs and timelines, mandating that the procurement cycle be streamlined to six months, enhancing efficiency for investors”, said Sen. Lokpobiri.

By incentivizing both non-associated gas and deep-water developments, Tinubu’s administration seeks to bolster Nigeria’s competitiveness as an energy investment hub in Africa. This forward-looking framework is designed to harness the country’s resources while diversifying revenue streams, ensuring a balanced approach that supports growth and sustainability in Nigeria’s oil and gas industry.

Additionally, Lokpobiri highlighted the government’s steadfast commitment to the Nigerian Oil and Gas Industry Content Development (NOGICD) Act. While promoting local content is critical, he acknowledged the need for a balanced approach to avoid creating barriers for foreign investment. The Minister assured stakeholders that discussions are underway to align NOGICD Act amendments with the dual goals of fostering local growth and maintaining investor confidence.

The Minister emphasized that the government’s recent initiative to launch bid rounds for thirty-one oil and gas blocks will be a cornerstone of Nigeria’s strategic development. Each block has been meticulously selected for its potential to boost reserves and stimulate economic growth. In line with international best practices, barriers to entry have been reduced through signature bonuses to attract a wider range of investors, with strict enforcement of Nigeria’s “drill or drop” policy.

Lokpobiri called for greater commitment from industry players to support Nigeria’s ambitious plan to increase oil production by over one million barrels within the next 24 months. “We cannot afford to hold valuable fields in perpetuity,” he stated. “It’s either you put them to work or relinquish them. The era of renewing licenses without development is over.”

The Minister received commendations from the Oil Producers Trade Section (OPTS) for his proactive approach, which was described as “a breath of fresh air” for the sector.

Senator Lokpobiri’s address served as a clarion call to industry stakeholders to collaborate in securing Nigeria’s energy future. As he emphasized, “Nigeria’s petroleum resources hold immense value and potential. Realizing this potential requires addressing our challenges and leveraging our strengths to ensure shared prosperity and energy security.”