Nigeria's Energy Future: Prioritize Gas, Protect Oil – NAPE President's Call

Nigeria’s Hydrocarbon Industry and the Path to Reserves Growth

In a recent interview, Mrs. Cecilia Olajumoke Ajayi, President of the Nigerian Association of Petroleum Explorationists (NAPE), discussed key challenges and opportunities in Nigeria’s hydrocarbon industry. The conversation covered the implications of recent policy changes, investment dynamics, and the role of exploration, technology, and local capabilities in driving reserves growth.

Executive Order 9 and Fiscal Governance

President Bola Tinubu recently signed Executive Order 9, which mandates that all oil and gas revenues be paid directly into the Federation Account, suspending certain revenue retention mechanisms under the Petroleum Industry Act (PIA). According to Ajayi, this order signals a move toward greater fiscal centralization and transparency. While it reinforces constitutional principles of revenue remittance, it also raises concerns about contract sanctity and regulatory predictability. Investors value transparency, but abrupt policy shifts could create uncertainty, affecting the stability of the investment environment.

For NNPC Limited, the long-term impact will depend on its ability to function as a commercially independent energy company. Preserving commercial autonomy, strategic flexibility, and adherence to market-based principles are crucial for sustaining investor confidence and operational efficiency.

Impact on Investment and Exploration Momentum

The order may increase investor caution in frontier basins, which are already high-risk, long-cycle, and capital-intensive. Investors typically require stable fiscal assurances before committing to such projects. However, if the government provides targeted incentives—such as tax holidays, accelerated cost recovery, seismic funding support, and infrastructure guarantees—these basins could still attract strategic investors, especially those focused on gas.

Underexplored Opportunities in Nigeria

Ajayi highlighted that Nigeria’s most underexplored opportunities lie in a combination of deep frontier plays and overlooked mature basin potential. Frontier basins offer significant geological upside but remain data-poor, while deeper plays in the Niger Delta present more immediate commercial potential. Improved imaging technology, deeper drilling, and redevelopment of bypassed reservoirs could unlock additional reserves faster and at lower risk than greenfield exploration.

Prioritizing Levers for Impact

While exploration, local capability, and technology are all essential, they are mutually reinforcing. Exploration is vital for replenishing reserves, local capability ensures value creation and skills development, and technology enhances efficiency and recovery rates. A coordinated approach that integrates all three is necessary for sustainable impact.

Bold Steps for ‘Unlocking More Barrels’

Ajayi suggested a bold national exploration risk-sharing framework. Nigeria could establish a sovereign-backed Exploration Risk Fund to co-finance frontier seismic acquisition and wildcat drilling alongside private operators. A coordinated basin-opening strategy and an “open-access subsurface data marketplace” would also improve exploration momentum.

Justifying Reserves Growth Amid Energy Transition

Despite the global energy transition, Nigeria must continue aggressive reserves growth to meet its energy needs and finance development. The focus should shift from producing more oil to producing competitively, efficiently, and with lower carbon intensity. Lower-emission barrels, gas-led industrialization, and monetizing reserves before demand peaks are key strategies.

Gas vs. Oil: Strategic Priorities

Gas exploration should be prioritized strategically, but not at the expense of oil. Gas is critical for power generation, petrochemicals, and LNG exports, offering Nigeria a comparative advantage. However, oil revenues will remain dominant in the medium term. The “more barrels” narrative should evolve into a broader “more molecules and more value” approach.

Realistic Reserve Classes to Target

Over the next 5–10 years, Nigeria should focus on converting contingent and probable reserves into proven reserves. This includes appraisal drilling, redeveloping mature fields, improving commerciality through infrastructure and fiscal incentives, and applying enhanced recovery technologies.

Bottlenecks to Reserves Growth

Capital, policy, subsurface uncertainty, and execution capacity are all interconnected bottlenecks. A balanced approach addressing these factors is essential for sustainable reserves growth.

NAPE’s Theme and Practical Implications

This year’s NAPE theme, “Unlocking More Barrels: Driving Reserves Growth through Exploration, Local Capabilities and Adaptive Technology,” emphasizes the need for Nigeria to move beyond legacy reserves. It calls for expanding frontier and deepwater exploration, improving reserve recovery, deploying smarter technologies, and building local technical competence.

Outcomes from the NAPE Conference

Stakeholders can expect discussions on strengthening collaboration between regulators and operators, attracting exploration investment, advancing technology adoption, promoting gas commercialization, and enhancing local technical capacity. The conference aims to shape a balanced approach to reserves growth, profitability, and the realities of the energy transition.

Adaptive Technology in Nigeria

In a context where infrastructure and data availability can be limiting, “adaptive technology” means deploying solutions that work despite these constraints. This includes low-cost modular production systems, cloud-based geoscience platforms, AI-assisted seismic interpretation, remote monitoring technologies, mobile drilling, mini-LNG systems, and incremental enhanced recovery methods.