Nigeria’s Offshore Oil Market to Grow by 4.1% CAGR, Reaching $47.03 Billion By 2031

The value of Nigeria’s offshore oil and gas production market will grow from $34.18 billion in 2023 to $47.03 billion by 2031, new market research has found.

In addition, the Compound and Annual Growth Rate (CAGR) will grow by  4.1 per cent within the period spanning to 2031, the report by Research and Markets indicated.

Headquartered in Dublin, Ireland, Research and Markets was founded in 2002 to connect businesses with the market insights and analysis to enable intelligent decision-making, priding itself as the world’s largest market research store with clients all over the world.

Snippets of the 76-page report: “Nigeria Offshore Oil and Gas Production Market Size and Forecast, Regional Share, Trend, and Growth Opportunity Analysis Report Coverage”, noted that Nigeria’s production of 552.84 million barrels of crude oil, including condensate in 2023 alone, reaffirmed the country’s critical role in shaping the energy landscape.

“The Nigeria offshore oil and gas production market continues to thrive, with an impressive valuation of $34.18 billion in 2023. As Africa’s premier crude oil producer, Nigeria is expected to see its market expand to an estimated $47.03 billion by 2031, growing at a CAGR of 4.1 per cent within the period spanning from 2023 to 2031”, the report said.

According to the study, Nigeria’s market is meticulously segmented by type and application to provide a structured view of the industry dynamics, with the spotlight being crude oil, which emerged as the dominant segment, with robust demand from international markets favouring Nigerian oil.

On the other front, transportation, it said, led the market with its substantial share in 2023 and is anticipated to maintain this trend throughout the forecast period.

Concurrently, the power generation segment, it maintained, demonstrates promising growth prospects, with a projected CAGR of 5.7 per cent, powered by burgeoning demand for natural gas in electricity generation.

An analysis of the competitive landscape showcased the prominence of major players such as TotalEnergies, Shell Plc, among others, noting that these entities are instrumental in steering the market towards growth, propelled by strategic inorganic tactics like mergers, acquisitions, and partnerships that not only enhance outreach but also address customer demand efficiently.

“These strategies, coupled with product and service enhancements integrating advanced technology, are pivotal for market expansion,” the report added.

Highlighting a significant shift, it stated that Nigeria offshore oil and gas producers are increasingly leaning towards the exploration and production of offshore natural gas, in alignment with the national initiative for competitive market stature.

The Petroleum Industry Act (PIA) enacted in August 2021, it said, exemplifies the Nigerian government’s commitment to rejuvenate investor interest in upstream development and nurture community welfare in regions impacted by oil exploration.

The analysis, the research observed, underscores key drivers influencing Nigeria’s offshore oil and gas production market, from burgeoning international demand to the government’s strategic initiatives in the sector.

“Equally, it marks out existing and emergent hindrances and their implications for the industry. Insights into these dynamics equip stakeholders across the value chain to hone long-term, actionable strategies and enhance decision-making processes.

“This period is indeed pivotal for Nigeria’s offshore oil and gas sector, with escalating growth prospects shaping the future of energy production and its extensive global reach. The dedication to advancing the industry is evident, paving the way for substantial economic and infrastructural growth within the country and across the continent,” it added.

Nigeria has been the largest crude oil producer in Africa for many years. According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) the total volume of crude oil (including condensate) produced in the country accounted for 552.84 million barrels in 2023.

However, disruptions in production outages or unplanned production in the country resulted in declining crude oil production below Angola, second highest oil producer, at some point last year.

Nigeria faced a decline in oil production during 2008-2010, 2016-2018, and 2022 owing to the recession, militant strikes on oil infrastructure, facility closure & oil worker strikes, respectively.

The increase in demand for natural gas in the sector, owing to its lower carbon emissions as compared to oil, fuels the Nigeria offshore oil and gas production market growth, the documents added.

Meanwhile, the federal government at the weekend reiterated its commitment to ensuring a conducive and competitive environment for investors in Nigeria’s oil and gas sector.

The assurance was given by the Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, during a meeting with the President, Exploration and Production, TotalEnergies, Mr. Nicolas Terraz, in Abuja.

According to a statement in Abuja by Lokpobiri’s spokesperson, Nneamaka Okafor, while commending TotalEnergies for being a ‘trusted and longstanding partner’ in Nigeria’s oil and gas sector, the minister assured the oil company of the government’s support.

He emphasised that the federal government was fully committed to addressing any challenges that may have previously hindered investments, reaffirming Nigeria’s readiness to welcome more investments in the oil sector.

“Every necessary assurance to investors must not only be given but must also be seen to have been made. We understand the importance of creating an environment where investors can confidently expand their operations, and I can assure you that the requests made by TotalEnergies in the past are being addressed.

“Nigeria remains ever ready and willing to facilitate more investments in the oil sector,” said Lokpobiri.

The minister further reiterated the government’s dedication to ensuring that Nigeria remains a secure destination for global energy investments.

He noted that strategic partnerships with companies like TotalEnergies will play a critical role in sustaining growth and development in the sector.

The discussions, the statement said, marked another step forward in fostering long-term partnerships with international investors, aimed at boosting production and ensuring sustainable development in Nigeria’s energy sector.

For his part, during the meeting, Terraz was quoted as expressing his company’s satisfaction with the federal government’s ongoing efforts to provide a stable and investment-friendly climate.

“The discussions focused on TotalEnergies’ desire to embark on further investments in Nigeria, particularly in the Bonga North Offshore project and joint ventures with Shell Petroleum Development Company (SPDC) and the Nigerian National Petroleum Company Limited (NNPC).

“These projects have recently received board approval, and Terraz noted that the company is working to finalise these deals by the end of the year,” the statement added.

The top TotalEnergies official said he was glad to see the positive steps taken by the Nigerian government in creating a conducive environment for business.

“We remain committed to further deepening our investments in Nigeria, especially with the opportunities that projects like Bonga North Offshore and our joint ventures with SPDC and NNPC present,” Terraz said.

Emmanuel Addeh 

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