December 03, 2024 [Chem Analyst]- TotalEnergies is on track to approve a $750 million gas project in Nigeria in 2025, marking a significant step in the country’s efforts to attract more investment into its hydrocarbon sector, as reported by several news agencies. This move comes after the company had already committed approximately $500 million earlier this year to a joint venture with the state-run Nigerian National Petroleum Corporation (NNPC) to develop the Ubeta onshore gas field. Expected to yield 300 million cubic feet of gas per day, the Ubeta project will strengthen the supply to Nigeria’s Liquefied Natural Gas (LNG) facility, a crucial component of the country’s energy infrastructure.
The new $750 million project, known as the Ima project, is set to be a shallow-water gas development, created in partnership with a local Nigerian firm. This initiative is aimed at further boosting gas supply to Nigeria’s LNG plant. Mike Sangster, Senior Vice President of Exploration and Production at TotalEnergies for the Africa region, provided insight into the project during his speech at the France-Nigeria business forum in Paris. Sangster highlighted that the Ima project represents an important part of the company’s commitment to Nigeria’s gas sector, a sector that has been critical to both local and global energy markets. The shallow-water project will not only increase Nigeria’s gas output but also help solidify TotalEnergies’ presence in the country.
While TotalEnergies is optimistic about the potential of these ventures, Sangster acknowledged that regulatory hurdles remain in the country’s oil and gas sector. However, he emphasized the positive changes that have been made in the past year, which have contributed to the company’s decision to reinvest in Nigeria. Sangster stressed that these changes have provided the company with the incentive to stop the decline in oil and gas production and, more importantly, start reversing it. The company’s renewed commitment to Nigeria is a sign of confidence in the direction the government is taking to address the challenges facing the energy sector.
The administration of President Bola Tinubu, which took office in May 2023, has taken several steps to improve the investment climate in Nigeria’s oil and gas industry. Notably, two executive orders were signed earlier in 2023 aimed at boosting efficiency in the sector. Additionally, Nigeria is looking to attract as much as $10 billion in new investments, particularly in deep-water gas exploration, by offering tax breaks and other incentives through a new policy framework designed to stimulate growth in the sector.
However, Sangster also pointed out that there is still much to be done to simplify and accelerate regulatory processes to attract more investment. One of the key suggestions he made was to relax local content regulations further to enable the return of international contractors, particularly those with expertise in deep-water projects. Sangster noted that this would foster competition within the industry, potentially unlocking investment that has been held up due to restrictive regulations.
TotalEnergies’ plans to invest in Nigeria reflect a broader trend of international companies renewing their interest in the country’s oil and gas sector. Despite the challenges, Nigeria remains a critical player in global energy markets, particularly in natural gas. TotalEnergies’ continued investment in the country could play a vital role in stabilizing Nigeria’s energy production and enhancing its position as a leading gas exporter. With ongoing improvements in regulation and policy, the future of Nigeria’s oil and gas sector appears poised for a significant turnaround, and TotalEnergies is well-positioned to play a key role in that transformation.
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