Developments In 2024: Key Transactions, Investments, and Policies
Oil and Gas Sector Milestones
Dangote Refinery Operations: The world's largest single-train refinery commenced operations, refining diesel, aviation fuel, and Euro-5 petrol for domestic and export markets. The refinery's export of jet fuel to Europe showed its international competitiveness.
Nigeria-Morocco Gas Pipeline Progress: The $25 billion NigeriaMorocco Gas Pipeline project gained significant traction in 2024, with public tenders announced for its development. This ambitious transcontinental pipeline aims to transport natural gas from Nigeria to Morocco, traversing several West African countries before connecting to Europe. Once completed, the pipeline will enhance regional energy integration, bolster Nigeria's position as a major energy supplier to Europe, and significantly increase foreign exchange earnings by opening new export markets for Nigerian natural gas.
TotalEnergies LNG Investment: TotalEnergies demonstrated strong confidence in Nigeria's natural gas sector by committing $750 million to expand the country's liquefied natural gas (LNG) production capacity. This investment will support the construction of additional LNG infrastructure, enabling Nigeria to monetize its vast natural gas reserves more effectively. By increasing production and export capabilities, this initiative aligns with Nigeria's strategy to remain competitive in the global LNG market while meeting growing domestic and international energy demands.
$3.5 Billion Petrochemical Plant Agreement: The Nigerian government secured a landmark agreement to supply gas to the Brass Fertilizer and Petrochemical Plant, a $3.5 billion facility under the Decade of Gas initiative. This project exemplifies strategic efforts to maximize the economic value of Nigeria's abundant gas reserves. Once operational, the plant will produce essential industrial materials such as fertilizers and plastics, contributing to domestic industrialization and export revenues. It also aligns with Nigeria's push for gas monetization by reducing gas flaring and creating jobs across the energy and manufacturing sectors.
Shell's $2.4 Billion Asset Divestment to Renaissance Group: Shell's sale of its onshore oil and gas assets to Renaissance Group marked a key moment for local participation in Nigeria's energy sector. The transaction, valued at $2.4 billion, followed prolonged regulatory hurdles and reflects Nigeria's commitment to increasing indigenous content in upstream operations. This divestment has empowered local companies to manage strategic assets, fostering job creation and skill development while ensuring sustained production levels. The deal also signals a shift in focus for international oil companies (IOCs), as they increasingly prioritize offshore and deepwater projects.
ExxonMobil's $1.28 Billion Sale to Seplat Energy: Seplat Energy's acquisition of ExxonMobil's shallow water assets represents a transformative deal for Nigeria's upstream sector. This $1.28 billion transaction significantly boosts Seplat's production capacity to approximately 120,000 barrels of oil equivalent per day. By transferring these assets to a Nigerian operator, the deal advances the government's local content objectives and ensures greater retention of value within the domestic economy. The assets include vital infrastructure, such as the Qua Iboe Terminal, enhancing Seplat's operational capabilities and positioning it as a leading indigenous player.
Power Sector Highlights
State-Level Electricity Markets: Lagos, Ogun, and Oyo made significant strides in decentralizing electricity governance under the Electricity Act 2023. Lagos enacted its Electricity Law 2024, which established the Lagos Electricity Market and an Off-Grid Electrification Strategy to address underserved areas. Ogun's regulatory commission also gained oversight of its market, which signalled increased autonomy for states in electricity management.
$800 Million Federal Allocation for Power Infrastructure: Under the Presidential Power Initiative (PPI), the Federal Government allocated $800 million to upgrade substations and distribution networks in major franchise areas, including Benin, Port Harcourt, and Abuja. This investment aimed to reduce load rejection by Distribution Companies (DisCos) and enhance electricity access for underserved communities. If implemented effectively, this funding could significantly improve Nigeria's power reliability.
SCADA System Deployment: The Transmission Company of Nigeria (TCN), supported by a $6 billion fund, advanced the deployment of the Supervisory Control and Data Acquisition (SCADA) system. This technological upgrade will modernize Nigeria's grid by enabling real-time monitoring and efficient load management. Once operational, SCADA is expected to reduce transmission losses, enhance grid reliability, and create a foundation for future technological innovations.
1.43 Million Smart Meters Initiative: To close the metering gap, the Federal Government partnered with three Chinese firms to supply and install 1.43 million smart meters. Financed through a $500 million World Bank facility, this project aims to improve billing accuracy, reduce electricity theft, and build consumer trust. Enhanced metering is also critical to the financial sustainability of DisCos, as it enables better revenue collection.
Renewable Energy Advances
Shiroro Solar-Hydro Hybrid Project: The NSIA and North South Power's collaboration on a 20 MW solar-hydro hybrid project at the Shiroro Hydroelectric Plant demonstrated innovative integration of renewable energy sources. By combining solar capacity with existing hydropower, the project enhances grid reliability, particularly during dry seasons when hydropower generation typically declines.
Rockefeller Foundation and Bezos Earth Fund Mini-Grid Program: This ambitious initiative aims to establish 10,000 MW of solar mini-grid capacity across Nigeria, addressing the persistent energy access gap in rural areas. By leveraging international funding and expertise, the program shows the potential of public-private partnerships in driving renewable energy adoption.
Carbon Market Development: President Tinubu's creation of the Intergovernmental Committee on Carbon Market Activation marked Nigeria's entry into global carbon trading. With a $2.5 million activation plan, this initiative aims to attract investments in renewable energy projects while positioning Nigeria as a leader in climate finance.
Key Policies
Electricity Act Implementation
The Electricity Act 2023 set the foundation for state-level electricity markets, granting states autonomy to regulate power generation, transmission, and distribution within their jurisdictions. Lagos, Ogun, and Oyo spearheaded this shift, with Lagos enacting its Electricity Law 2024, which created a regulatory framework tailored to local needs. These policies are expected to drive investments and improve supply reliability.
Midstream Petroleum (Host Communities Development Trust) Regulations 2024:
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) issued comprehensive guidelines for host community development trusts. These regulations mandate licensees in the midstream sector to allocate 3% of their annual operating expenditure to community development, focusing on education, healthcare, and infrastructure. This policy aims to foster transparency and sustainability in host community relations.
NERC Mini-Grid Tariff Tool Implementation:
The Nigerian Electricity Regulatory Commission (NERC) adopted the African Forum for Utility Regulators (AFUR) Mini-Grid Tariff Tool. This policy introduced cost-reflective tariffs for mini-grid projects, which simplifies regulatory processes and encourages private-sector participation in rural electrification.
NUPRC Licensing Round
In 2024, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) launched a licensing round for 36 oil blocks. The process introduced improved fiscal terms to attract investments, with an emphasis on underutilized assets. The licensing round also targeted increased production capacity to strengthen Nigeria's energy security.
Midstream and Downstream Petroleum Fees and Levies Regulation
A 0.5% levy on wholesale petroleum products was introduced, with proceeds directed to the Authority Fund and Midstream Gas Infrastructure Fund. This policy is aimed at enhancing compliance, accountability, and the development of essential gas infrastructure.
Expectations for 2025: Opportunities and Trends
Power Sector Transformation
Localized Electricity Markets:
Building on the success of Lagos, Ogun, and Oyo States, more states are anticipated to enact electricity laws that decentralize power regulation. These localized markets will provide states the flexibility to address unique challenges, from infrastructure deficits to tariff structures, while attracting investments tailored to their specific needs. For instance, Lagos' off-grid electrification strategies have created a blueprint for addressing underserved areas, which other states might replicate in 2025. This decentralization could also foster healthy competition among states, ultimately improving efficiency and service delivery.
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