Saudi Arabia is planning to invest billions of dollars in Nigeria’s downstream sector, following a meeting between Nigerian President Bola Ahmed Tinubu and Saudi Arabia’s Crown Prince Mohammed bin Salman in Riyadh. The investment is expected to boost Nigeria’s oil refineries, which have been struggling to meet fuel demand in recent years. Nigeria, with its significant potential in crude oil exploration and processing, has been seeking foreign direct investment in its oil and gas sector. Meanwhile, Saudi Arabia has launched its ‘Empowering Africa’ drive to bring cleaner energy, connectivity, e-health, and e-education solutions to African countries, including Nigeria. The investment and cooperation agreements signed at a summit in Riyadh are expected to bring immediate flow of investment from the Middle East to several African countries, including Nigeria. Nigeria, Africa’s leading crude oil producer, has been facing challenges in upgrading its oil refineries due to lack of funds. As a result, the country has been importing fuel to meet its domestic demand. Despite having the second-largest proven crude oil reserves in Africa, Nigeria has been constrained in maximizing export revenue from hydrocarbons due to structural challenges. The country has the potential to benefit significantly from its natural resources by implementing reforms and improving infrastructure. However, security issues, including oil theft and vandalism, have been major obstacles in the growth of Nigeria’s energy sector. Oil theft in Nigeria, which takes place through the understatement of formal oil shipments and diversion from pipelines, has led to interruptions in crude oil shipments and reduced activities of foreign firms in onshore fields. International oil and gas companies, such as Shell, TotalEnergies, Chevron, Eni, and ExxonMobil, remain the major hydrocarbons producers in the Nigerian market, despite some of them attempting to reduce their footprint in the country in recent years. The successful enactment of the Petroleum Industry Act in 2021 and government initiatives to improve security in the energy sector are expected to play a crucial role in reviving interest in Nigeria’s hydrocarbons reserves. Saudi Arabia’s investment in Nigeria’s downstream sector is a significant development that could potentially address the challenges faced by Nigeria’s oil and gas industry and strengthen the country’s position as a key global energy player.
