Olu Verheijen, special adviser on energy to President Bola Ahmed Tinubu of the Federal Republic of Nigeria, talks to The Energy Year about the country’s evolving energy policy and legal framework, how Nigeria is increasing its competitiveness in Africa and worldwide, and the effects of recent executive orders on the country’s energy sector.

What impact will new policy frameworks and the improved Petroleum Industry Act (PIA) have on the upstream sector, and what was the rationale behind these new policies?

The passage of the PIA was protracted, yet it established a foundational legal framework and highlighted areas requiring greater clarity. From the outset of President Tinubu’s administration, we prioritised strengthening this framework, working closely with regulators to align their guidelines not only with the PIA but also with the president’s broader policy objectives.
Our initial focus was on addressing critical gaps to enhance legal certainty, clarity and stability – essential factors for investors when making capital-allocation decisions. A key realisation was the need for a greater delineation of regulatory roles, particularly regarding the mandates of the upstream regulator, NUPRC, and the midstream and downstream regulator, NMDPRA.
While Nigeria is a major oil and gas exporter, the underdevelopment of midstream and downstream infrastructure has hindered energy self-sufficiency and security. The intent behind creating a distinct midstream and downstream regulator was to shift the emphasis from upstream activities and exports toward comprehensive sectoral development.
To prevent regulatory overlap or ambiguity, one of the administration’s earliest presidential directives clarified the jurisdictional boundaries between these entities. This measure was critical, as investor apprehensions were emerging due to uncertainties in the regulatory landscape. Our approach has been data-driven, impact-oriented and closely aligned with national priorities rather than formulated in isolation.
Over the past decade, investment in Nigeria’s oil and gas sector has declined, largely due to uncertainties surrounding the PIA. Investors hesitated, as they were uncertain about the prospects for profitability and capital recovery, making the business climate less competitive compared to other oil-producing jurisdictions.
Transparency, credibility and regulatory clarity form the cornerstone of President Tinubu’s strategy to restore investor confidence and catalyse significant investment inflows.
From day one, the administration has underscored the importance of energy security, which would have been unattainable without market liberalisation.
A decisive step in this direction was the removal of subsidies in the PMS [premium motor spirit] sector, opening the downstream market to competition. This suite of reforms sent a clear and unequivocal signal to investors about the administration’s commitment to a stable, transparent and investment-friendly energy sector.

How has the African oil and gas landscape changed, and how has Nigeria changed in response?

Africa’s oil and gas landscape has undergone a transformation, with new entrants reshaping the competitive dynamics. While Nigeria has long been the continent’s hydrocarbons hub, emerging rivals are rapidly gaining traction.
To address this challenge, we undertook a critical assessment: What factors have hindered our ability to attract and retain capital? How do we define competitiveness? What data should guide our decisions?
A comparative analysis was essential. We examined global capital flows over the past decade, evaluating investment returns, project costs and execution timelines. This analysis revealed that, while Nigeria offers competitive fiscal incentives for onshore and associated gas, it lags in attracting investment for non-associated gas and deepwater offshore assets.
IOCs have operated in Nigeria for decades. However, over the past 10 years, they have shifted approximately USD 82 billion in investments away from Nigeria to more favourable markets, including Brazil, Guyana, the Gulf of Mexico and more recently Namibia – jurisdictions where regulatory frameworks and business environments are more conducive to investment.
Recognising this trend, we conducted an introspective review to identify the root causes of our declining competitiveness. By leveraging data-driven insights, we sought to recalibrate our approach, striking a balance between investor expectations and the government’s capacity to implement sustainable reforms.

Can you guide us through the strategy and policies that the government has implemented to address the global competition in the oil and gas sector?

In our assessment of deepwater and non-associated gas investments, we identified three fundamental challenges.
First, time-to-market project execution timelines in Nigeria are significantly longer than in competing jurisdictions. Given the mounting pressure from IOCs and financial institutions to optimise fossil-fuel capital deployment, it is imperative to streamline processes for greater efficiency.
The second is costs. Most competitive projects globally maintain unit technical costs below USD 20 per boe, whereas Nigeria’s costs are nearly double, driven in part by systemic inefficiencies.
The third is fiscal competitiveness. We needed a comprehensive evaluation of existing incentives to determine what adjustments were necessary to improve investment attractiveness while balancing timeframes and returns on capital.
To address these issues, we engaged directly with operators, conducted detailed modelling, gathered insights and refined our strategic priorities. For non-associated gas, a critical oversight in the PIA was the failure to distinguish gas projects based on liquid composition. The capital and infrastructure requirements vary significantly between wet and dry gasfields, yet this differentiation was not accounted for.
Similarly, the framework did not differentiate between greenfield and brownfield projects; greenfields entail higher capital expenditure and therefore demand stronger investment incentives.
For deepwater we benchmarked Nigeria against 13 other countries where IOCs actively invest. The findings were stark: Nigeria ranked ninth in investment attractiveness. To secure capital inflows, we needed to move into the top three.
This required further segmentation, differentiating between high- and low-potential production. A smaller 40,000-bpd project operates under vastly different economic conditions than a large-scale development such as Bonga, necessitating tailored incentives to accommodate these disparities.
Crafting effective incentives demanded a nuanced approach. Given Nigeria’s constrained fiscal space, we were not in a position to forgo existing tax revenues. Instead, we focused on production-based incentives, introducing flexible investment timelines requiring projects to either produce or invest within a set period.
Additionally, we replaced investment tax credits with production tax credits, ensuring that fiscal benefits materialised only upon project completion and the commencement of production within a defined timeframe.
Beyond fiscal and regulatory adjustments, coordination and transparency among policymakers, industry stakeholders and government agencies remain paramount. A case in point is the drill-or-drop principle already embedded in the PIA, with regulatory bodies considering its enforcement.
However, enforcing such measures without first creating a competitive investment climate would be counterproductive. The priority must be to establish the right conditions for investment. Only then does it become justifiable to impose compliance mechanisms.

How effective have some of Tinubu’s executive orders been so far in incentivising investors and fostering economic growth?

Until recently, Nigeria’s deepwater oil and gas sector had seen no major investment since TotalEnergies’ Egina project in 2013. However, the issuance of Executive Orders 40, 41 and 42 in February 2024 marked a turning point.
Within months, TotalEnergies announced a USD 550-million FID for the Ubeta gasfield, followed by Shell’s USD 5-billion FID for the Bonga North Deep Offshore project in December 2024. The latter milestone is significant not only for its scale but also for its 350 million barrels of estimated crude reserves, which will enhance Nigeria’s oil production, revenue and standing as Africa’s leading producer.
This is just the beginning. We anticipate further major investments from IOCs and other stakeholders in deep offshore and gas. With the implementation of recent reforms, Nigeria has repositioned itself among the top-three most attractive deepwater investment destinations.
By the end of Q1 2025, we aim to unlock USD 2 billion in new investments, closely monitoring key projects while creating favourable conditions for long-stalled developments, such as Eni’s Zabazaba project, to progress once legal issues are resolved.
By the end of President Tinubu’s first term in 2027, Nigeria’s upstream sector will operate under a clear and stable regulatory framework. In the downstream, its full potential will be realised, with the Dangote Refinery operational, state-owned refineries in Port Harcourt and Warri undergoing rehabilitation and modular refineries emerging across the Niger Delta, fostering a dynamic downstream ecosystem.
On the midstream side, targeted incentives for non-associated gas have enhanced the supply reliability for NLNG, reinforcing Nigeria’s top-10 global LNG export capacity and driving power-sector growth, industrialisation and economic diversification. With 80% of Nigeria’s on-grid electricity powered by gas, our aims are securing investments to meet domestic energy needs while expanding exports.

How do you think the onshore landscape will develop following the IOCs’ divestments and Nigerian players taking greater ownership of domestic assets?

The fiscal incentives for non-associated gas and deepwater investments have reinforced the role of longstanding IOCs, enabling them to leverage their expertise in high-capex, technically complex, deepwater projects. This represents the first category of investors driving Nigeria’s medium- and long-term oil and gas targets.
Simultaneously, ongoing IOC divestments are reshaping the industry, creating a new class of onshore investors acquiring these assets. We are ensuring they have the requisite technical and financial capacity to deliver our near-term production targets while also ensuring they can expand their footprint across Africa, evolving into small, independent IOCs with operations in Angola, São Tomé and Príncipe and beyond.
These indigenous firms are poised to play a pivotal role in the sector’s future. By securing substantial USD-denominated financing, their production, whether oil or gas, is expected to contribute significantly to foreign exchange earnings. Additionally, their domestic investments will bolster Nigeria’s energy security and improve the national trade balance.
As these companies expand their presence in Nigeria’s oil and gas value chain, their products will drive local currency earnings, reducing the reliance on imports. The monetisation of natural gas, including CNG and petrochemicals, will enable domestic sales in naira, thereby curbing demand for imported commodities, such as fertilisers and automotive gas oil.
This strategic shift will not only strengthen the energy sector but also foster a positive trade balance, enhancing Nigeria’s economic resilience.

Can you give us a breakdown of the administration’s energy-transition efforts and its position regarding more environmentally friendly measures and waste avoidance?
We are prioritising flared gas capture, and historical data demonstrates Nigeria’s global leadership in flare reduction since 1999.
A key success has been NLNG’s role in capturing associated gas (AG) from inception, significantly reducing flaring. Additionally, most major projects approved since then incorporate AG capture mechanisms.
However, a persistent challenge remains: commercialising small flared gas volumes, particularly those located on third-party assets. To address this, regulators are actively integrating these volumes into the market through initiatives such as the Flared Gas Commercialisation Project, a key component of the Nigeria Gas Master Plan.
Further strengthening this effort, the October 2024 presidential directive on deepwater production facilitates offshore gas monetisation, leveraging improved pricing structures. Historically, projects such as Bonga and other deepwater operations have faced significant non-routine flaring due to the absence of a dedicated fiscal gas framework at the time these basins were developed over three decades ago.
Today, with a comprehensive regulatory and fiscal structure in place, Nigeria is well-positioned to maximise gas value extraction and drive sustainable energy utilisation.

What opportunities do you see ahead for Nigeria with respect to becoming an energy hub in West Africa and beyond?
Our primary objective is to ensure domestic energy security. Beyond that, we aim to sustain foreign exchange earnings from energy exports to Europe while positioning Nigeria as an energy hub for West Africa and sub-Saharan Africa. Achieving this requires an open, data-driven approach, leveraging global insights to inform strategic decisions.
With gas increasingly traded as LNG, we must assess the optimal transport mechanisms for different markets. Where brownfield opportunities exist to extend pipeline networks and integrate markets into existing infrastructure, pipelines will have a competitive advantage over LNG, provided they ensure secure and continuous gas flow.
Conversely, for distant markets requiring rapid access, LNG offers a more viable solution. To maximise market reach and efficiency, we are developing a diversified gas transportation strategy, balancing pipeline expansions with LNG capabilities to enhance regional and global connectivity.

Can you outline the pillars of President Tinubu’s agenda to strengthen and advance the nation’s power sector?
The Nigerian government is implementing a comprehensive strategy to expand electricity access and enhance supply reliability by introducing financial reforms that will attract private-sector investments and improve on-grid infrastructure and distribution networks. There are several key initiatives.
The first is the Presidential Metering Initiative (PMI) for Revenue Assurance. The PMI aims to deploy 5 million meters and associated infrastructure to eliminate estimated billing, close the metering gap and enhance revenue collection. By reducing losses and improving financial stability, the initiative will enable distribution companies to reinvest in infrastructure upgrades, ultimately improving power supply reliability.
The second is clearing legacy debt to restore financial stability. The government is addressing outstanding debts owed to power-sector stakeholders, which have hindered investment and weakened liquidity. By resolving these financial obligations, power companies will regain the capacity to upgrade infrastructure, ensuring a more stable electricity supply.
The third is transitioning to affordable and cost-reflective tariffs. Currently, the government spends NGN 200 billion [USD 130 million] annually on electricity subsidies, much of which benefits the wealthiest 25% rather than low-income households. To ensure fairer pricing, the government is restructuring subsidies, introducing a targeted subsidy framework that prioritises vulnerable consumers while allowing market-driven tariffs for others.
These initiatives aim to improve financial liquidity across the power sector, allowing companies to modernise the grid and expand access. Abundant and reliable electricity supply will enable factories, industrial clusters and manufacturers to scale operations, enhance productivity and drive economic expansion.
This will accelerate industrialisation, diversify the economy, and stimulate job creation and income growth, ultimately improving the standard of living for Nigerians.