Category: General News

ExxonMobil Bets On Nigeria’s Deepwater Oil Fields With A $1.5billion Investment Between Q2 2025-2027

ExxonMobil sequel to its divestment of its onshore assets to Seplat Energy, has affirmed its long-term commitment to Nigeria’s oil and gas sector with a planned $1.5 billion investment in deepwater exploration and development projects, a move set to reinforce confidence in the country’s upstream potential. 

The planned investment, which will be executed between Q2 2025 and 2027, will focus primarily on revitalizing production at the Usan deepwater oil field. 

The oil major has indicated that a Final Investment Decision (FID) is expected in late Q3 2025, pending the final approval of the Field Development Plan (FDP), along with internal and partner funding approvals. 

In addition to the Usan field, ExxonMobil also revealed intentions to accelerate development activities in other key deepwater assets, including the Owowo and Erha fields. These developments are part of a broader strategy to strengthen its operational footprint in Nigeria and support the country’s drive for increased production. 

ExxonMobil expresses support for NUPRC’s “Project 1 million Barrels” initiative  

Mr. Harris also expressed ExxonMobil’s support for NUPRC’s “Project 1 Million Barrels” initiative, which aims to boost Nigeria’s crude oil production capacity to 2.4 million barrels per day in the medium term. He emphasized the importance of strategic collaboration between operators and regulators in achieving this ambitious target. 

Responding to the development, the CCE of NUPRC, Engr. Gbenga Komolafe welcomed the announcement, describing ExxonMobil’s renewed commitment as timely and crucial for Nigeria’s upstream growth. He reiterated the Commission’s role in facilitating a stable and transparent regulatory environment, citing the importance of investor confidence in the success of the Petroleum Industry Act (PIA) reforms. 

The discussions during the courtesy visit also touched on key sectoral issues, including compliance with the Domestic Crude Supply Obligation (DCSO) and the enforcement of Section 109 of the PIA, which introduces the principle of “willing buyer, willing seller” for crude oil transactions within the domestic market. In his new capacity as Chairman of the Oil Producers Trade Section (OPTS), Mr. Harris pledged to use the platform to foster stronger collaboration between industry players and the NUPRC, with a focus on addressing regulatory challenges and unlocking further investment opportunities in the sector. 

ExxonMobil’s renewed capital injection into Nigeria’s deepwater assets is expected to stimulate job creation, technology transfer, and increase national oil production, ultimately contributing to improved foreign exchange earnings and energy security. 

Afreximbank launches $3 billion Revolving Oil Trade Financing Programme to boost
Intra-African, Caribbean petroleum trade.

This initiative, aimed at boosting the purchase of refined petroleum products between African and Caribbean countries is designed to address Africa’s significant reliance on imported refined petroleum products from outside the continent, which currently costs approximately $30 billion annually due to insufficient local refining capacity. 

Key aspects and expected impacts of the program include: 

• Promoting Intra-African and Caribbean Trade: The program specifically finances the purchase of refined petroleum products by African and Caribbean oil buyers from refineries operating in Africa. This is expected to facilitate trade flows within these regions, reducing dependency on extra-regional imports. 
• Leveraging Growing Refining Capacity: Afreximbank has been a major financier in developing refining capacity across Africa. This program aims to leverage these investments, such as the Dangote Refinery in Nigeria, the Lobito and Cabinda Refineries in Angola, and the refurbishment of the Port Harcourt Refinery, among others. The bank aims to help create over 1.3 million barrels per day (bpd) of refining capacity in Africa, transforming the Gulf of Guinea into a significant refining hub. 
• Revolving Facility: As a revolving facility, the $3 billion is expected to finance a much larger volume of trade, estimated between $10 billion and $14 billion in intra-African petroleum imports over time.
• Targeted Beneficiaries: The program will primarily provide critical trade finance to oil traders (both African and international), banks, and governments (including their ministries of finance or petroleum/energy and state-owned enterprises) mandated to import refined petroleum products.
• Product Focus: The key products covered include Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), Heavy Fuel Oil (HFO), Jet Fuel, and Kerosene. 
• Alignment with AfCFTA: This initiative strongly aligns with the objectives of the African Continental Free Trade Area (AfCFTA) agreement, aiming to facilitate intra-African trade, promote industrialization, and create jobs.
• Energy Security and Economic Resilience: By strengthening regional value chains and reducing import dependency, the program seeks to advance energy security and foster economic resilience within Africa and the Caribbean.

• Multiplier Effect: Beyond direct trade, the program is anticipated to have a multiplier effect on the downstream petroleum value chain, catalyzing investments in shipping, marine logistics, cargo insurance, and other ancillary services.

Afreximbank continues to play a significant role in promoting trade and economic integration across Africa and with the Caribbean through various initiatives, including the Pan-African Payment and Settlement System (PAPSS) and the AfriCaribbean Trade and Investment Forum.

Nigeria’s power sector is set for a potential transformation with the establishment of the National Integrated Electricity Policy. This policy, aimed at reshaping the country’s power sector, has already been set in motion, addressing key issues impacting growth within the industry.

The policy, backed by the revised Electricity Act of 2023, offers a glimmer of hope for a sector plagued by persistent challenges. From grid limitations to mounting debts, the power sector in Nigeria has long been at a crossroads, seeking sustainable solutions to enhance electricity generation, distribution, and overall efficiency. One of the critical focuses of the policy is to introduce new players into the sector’s value chain, with states like Lagos gearing up to enhance their regulatory framework to attract investments and improve tariffs.

Additionally, the policy recognizes the importance of incorporating newer sources of electricity, particularly renewable energy, to diversify the energy mix and increase reliability. However, amidst the optimism surrounding the new policy, there are pressing issues that demand immediate attention. The staggering debt owed by generation companies stands at a monumental $4 trillion, posing a significant threat to the sector’s stability and future growth. This debt, accumulated over time, highlights the financial strain experienced by key players within the industry.

The government’s commitment to clearing this debt and providing assurances to stakeholders is a crucial step towards resolving this critical issue. The policy’s call for cost-reflective tariffs and targeted subsidies for low-income consumers aims to create a more equitable and sustainable pricing framework. However, the implementation of these measures must be accompanied by improvements to the grid infrastructure to ensure reliable power supply across all consumer segments. Despite the challenges ahead, there is a growing recognition of the need to prioritize grid enhancement to meet the increasing demands of consumers and businesses.

The urgency to ‘fix the grid’ resonates as a core theme in discussions about the future of Nigeria’s power sector. While the timeline for grid improvements remains uncertain, stakeholders emphasize the paramount importance of this initiative for the sector’s viability and long-term success.

As the government explores various options to address the mounting debt and enhance the sector’s performance, a comprehensive strategy that includes fiscal discipline, infrastructure investments, and stakeholder collaboration will be essential. Private sector industry operators recommend cost-cutting measures within the government as a precursor for broader systemic changes required to drive sustainable growth in the power sector.

In conclusion, the Nigeria’s National Integrated Electricity Policy signifies a pivotal moment in the country’s energy landscape. Nigeria has the opportunity to unlock its power sector’s potential and pave the way for increased efficiency, reliability, and investment.

 

For further enquiries, kindly contact the F.O. Akinrele & Co. Energy, Oil & Gas and Natural Resources Group

Adedoyin Odelana – adedoyin_odelana@foakinrele.com

Jeremiah Adegboro – jeremiah_adegboro@foakinrele.com

NNPCL INITIAL PUBLIC OFFER (IPO) AT FINAL STAGE 

The Nigerian National Petroleum Company Limited (NNPC Ltd) is in the final stages of listing on the capital market as it prepares for an Initial Public Offering (IPO) in line with the Petroleum Industry Act (PIA) 2021. 

This was disclosed by Mr. Olugbenga Oluwaniyi, the company’s Chief Finance and Investor Relations Officer, on Thursday 27 March 2025. 

He revealed that NNPC Ltd has commenced an “IPO Beauty Parade”, a strategic engagement with prospective partners to ensure compliance with capital market regulations ahead of its planned listing. 

An IPO, which allows institutional investors to purchase shares in a company for the first time, will officially introduce NNPC Ltd to the stock market. 

Three key areas where partnerships are needed were mentioned: Investor Relations, IPO Readiness Advisers, and Investment Bank Partners. 

The selection of partners will be based on the strength of their proposals and their ability to provide comprehensive support in these areas. 

Under the Petroleum Industry Act (PIA) 2021, NNPC Ltd is required to transition from a state-owned entity to a fully commercial enterprise. This transformation also mandates compliance with the Company and Allied Matters Act (CAMA) 1990, ensuring transparency, efficiency, and profitability. 

This move represents a major shift in Nigeria’s oil and gas industry. By opening up to investors, NNPC Ltd aims to enhance corporate governance, attract private sector investment, and boost operational efficiency. 

NNPC Ltd is in the final stages of preparing for its IPO, a move that will significantly impact the Nigerian economy and the global oil and gas market. 

The ongoing IPO Beauty Parade will determine the best partners to guide the company through this crucial phase, ensuring a successful public offering. 

NNPC  is following the example of several state-owned oil firms that have gone public and turned out to be huge global successes. Such as  Saudi Aramco (Saudi Arabia), China National Offshore Oil Corporation (CNOOC), Sinopec (China), Gazprom (Russia), National Iranian Oil Company (NIOC) and Petrobras (Brazil). 

OIL PRICES 

Nigerian Bonny Light crude oil is currently trading at approximately  $74 per barrel. While oil prices have shown some volatility recently, with Brent crude futures (the benchmark pricing for Nigerian Bonny Light crude) recently settling at around $73.63 per barrel, Reuters reports that they are generally expected to remain in the mid-$70s range in the coming months, with potential for further increases due to factors like geopolitical tensions and supply constraints.  

Geopolitical tensions are exemplified by the intensifying conflicts in the Middle East, potentially leading to a “geopolitical premium” in crude prices.  

Global crude oil supply will invariably be impacted by new U.S. sanctions on Iranian crude oil, which could remove significant volumes from the market and drive oil prices upward.  

OPEC+ has also announced plans for gradual production increases however, it is anticipated that they will produce less than their announced targets to limit increases in global oil inventories.  

The February 2025 crude oil production data in Nigeria shows 1,465,006 BPD, which is lower than January 2025 but higher than October 2024 by 9%. This remains well below Nigeria’s daily production capacity and although daily production is limited within the OPEC+, Nigerian Oil Production Quota of 1.5mbpd currently applicable between June 2, 2024 and December 2025. 

The federal government has remained upbeat about the fresh upward trajectory of the country’s oil and gas sector, disclosing that an additional $2 billion in new investments would be expected by the end of the first quarter of 2025, a few months after Shell commenced development of the $5 billion Bonga North deepwater project. 

Additionally, 74 Chinese companies have indicated their interest in investing in Nigeria’s oil and gas sector. These companies are part of the 216 companies from China that are interested in investing in various sectors of the country’s economy, according to a statement issued by the Nigerian Upstream Petroleum Regulatory Commission on Monday. 

The Chairman of the House of Representatives Committee on Nigeria-China Relationship, Jaafaru Yakubu, disclosed this during a recent meeting with the Chief Executive of the NUPRC, Gbenga Komolafe. The commission met with and briefed the management of NUPRC on the ongoing efforts by the Federal Government to enhance the trade balance between Nigeria and China and to fostering an investor-friendly environment 

Following the recent signing of the Nigeria-China Relationship Agreement, a total of 216 Chinese companies have expressed their interest in investing in Nigeria. 

“Out of these, 74 companies are specifically focused on the oil and gas industry, signaling a major boost for the sector. 

It was stated that one of the key initiatives driving this engagement is the upcoming Nigeria-China Summit, where stakeholders from both countries will explore investment opportunities. 

NUPRC’s Target: 

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has set a production target of at least 2.1 million barrels of oil per day (MBOPD) by 2025.  

NUPRC’s Initiatives: 

The commission has introduced a two-phase metering regulation to enhance accurate hydrocarbon measurement and production allocation.  

Notwithstanding a recent drop in production in 2025, since the launch of the 1MBOPD Incremental Initiative in October 2024, Nigeria’s average crude oil production has increased significantly by 250,000 barrels per day, rising from 1.5 million barrels per day (MBPD) to 1.75 MBPD.  

For further enquiries kindly contact the F.O. Akinrele & Co. Energy, Oil & Gas and Natural Resources Group – info@foakinrele.com 

 

The overarching objective of port development in Nigeria is to improve port infrastructure, by focusing on improving infrastructure, efficiency, and technology to boost economic growth and facilitate trade, with a goal of Nigeria becoming a regional transshipment hub. 

 The Nigerian maritime sector has over the past 2 years undergone several developments. These include the introduction of Naira-based petroleum product sales by the NPA, the establishment of a One-Stop-Shop for efficient coordination, the appointment of new port managers, and the construction of inland dry ports like the Gateway Inland Dry Port in Ogun State.  

 In 2025, key developments in Nigeria’s maritime sector include efforts to improve maritime safety and security, infrastructure upgrades, and promoting indigenous shipowners, with initiatives like the Deep Blue Project and the Nigerian Maritime Industry Working Group (NIWG) playing a crucial role. 

 The following are a more detailed look at some key developments from 2024 -2025: 

 Safety and Security 

The Nigerian government and the Nigerian Maritime Administration and Safety Agency (NIMASA) have been working to enhance maritime security, including initiatives like the Deep Blue Project and collaboration with the Nigerian Navy to combat piracy and other maritime crimes.  

 

Safety Standards 

NIMASA has focused on enforcing safety standards, training, and awareness campaigns to educate operators and passengers on safety practices.  

 

Marine Environmental Pollution 

The government is taking measures to address marine pollution and protect the environment, including efforts to prevent oil spills and other forms of pollution.  

 

Infrastructure and Development. 

Port Modernization and Efficiency 

The objective is to combat major challenges of infrastructural deficiencies, corruption and inefficiency within the port sector. 

Infrastructure Challenges 

The lack of adequate infrastructure, including roads and rail networks, has hampered port operations.  

 

Capacity Constraints 

 Ports have struggled to handle the increasing volume of cargo, leading to congestion and delays.  

 

Infrastructure Development 

 Efforts are underway to upgrade Nigeria’s six ports namely Apapa, Tin Can Island (both in Lagos), Onne, Port Harcourt (both in Rivers State), Warri (in Delta State), and Calabar (in Cross River State) to decongest traffic, and attract larger vessels, with public-private partnerships encouraged for port modernization and infrastructure development with the overall objective of revenue generating and efficiency.  

 

The critical aspects of the port modernization are:  

 Rehabilitation and Renovation: The government is prioritizing the rehabilitation and renovation of existing port facilities, including quay walls, berths, and storage areas.  

 

Deep-Sea Ports: Development of deep-sea ports to accommodate larger vessels and modern shipping trends is a key focus.  

 

Rail Linkages: Establishing rail linkages to all ports is crucial for efficient cargo transportation and intermodal synergy.  

 

Technology and Automation 

 Digitalization: The Nigerian Ports Authority (NPA) aims to fully digitalize port operations by 2025.  

 E-payment and E-SEN: Implementing e-payment and Electronic Shipping Notice (E-SEN) systems for streamlined processes.  

Port Service Support Portal: Standardizing cargo handling and import-export operations through a portal to improve efficiency and transparency.  

 

Efficiency and Capacity 

 Improved Turn-Around Time: Efforts are underway to reduce vessel turn-around time and cargo dwell time in ports.  

 Enhanced Cargo Handling: Modernizing cargo handling equipment and procedures to improve efficiency.  

 

Private Sector Participation 

 Concessioning of Terminals: The government has implemented a policy of concessioning port terminals to private operators to improve efficiency and attract investment.  

 Public-Private Partnerships: Encouraging public-private partnerships for infrastructure development and modernization.  

 

Private Sector Participation – Specific Projects 

Badagry Deep Sea Port: A deep-sea port project in Badagry is in the pipeline, awaiting Federal Executive Council approval.  

Lagos Ports Modernization Project: The NPA is collaborating with ITB-HITECH Joint Venture to modernize the Lagos ports.  

 

Private Sector Participation – Key Players 

 The key players are;

 Nigerian Ports Authority (NPA): The government agency responsible for developing, owning, and operating ports and harbors.  

 

Federal Ministry of Transportation: Oversees the port sector and implements policies for modernization.  

 

Private Terminal Operators: Companies that operate port terminals under concession agreements. 

  

Nigerian Shippers Council: A government agency that promotes the interests of shippers and works towards improving port efficiency.  

 

 Floating Dock Project 

 NIMASA is partnering with the Nigerian Ports Authority (NPA) on the Floating Dock Project, which aims to provide economic benefits through employment and training opportunities.  

 

Investment in Maritime Infrastructure 

The government is investing in maritime infrastructure, including the acquisition of specialized mission patrol aircraft and vessels, as well as a command and control center.  

 

Indigenous Shipowners and Economic Growth. 

Empowering Indigenous Shipowners 

 The government is working to empower indigenous shipowners and increase local tonnage in the maritime sector with particular focus on the following areas: 

Cabotage Act 

The Cabotage Act reserves the commercial transport of goods and services within Nigerian coastal and inland waters to vessels flying the Nigerian flag owned by Nigerians and built in Nigeria.  

 

Marine Tourism 

NIMASA is promoting marine tourism as a key area for economic development, urging stakeholders to invest in relevant areas.  

 

Manpower Development 

NIMASA is focusing on manpower and human capacity development, including the training of seafarers and naval architects.  

 

NIMASA NSDP 

The Nigerian Seafarers Development Programme (NSDP) was created by NIMASA in 2008 with the mandate to train Nigerian youths to become seafarers and naval architects.  

 

 For further enquiries kindly contact the F.O. Akinrele & Co. International Trade, Shipping & Transport Group – info@foakinrele.com 

Between 2023 -2024, Nigeria experienced extreme exchange rate volatility with unprecedented erosions of Naira values against foreign currencies particularly, the US Dollar, GBP Sterling and the Euro. 

At the commencement of the term of the current government in May 2023, a floating exchange rate regime was introduced allowing market forces to determine the value of the Naira. The intentions were very well placed in view of the prevailing regime of multiple exchange rates in the previous government from 2015 – 2023. 

Under the previous government, unbridled foreign borrowing and a multiple exchange rate regime resulted in the erosion of foreign and domestic investor confidence. Huge gaps had arisen between the official and unofficial rates causing severe shortages of foreign exchange. This, coupled with the effect of COVID, signaled a dysfunctional economy. 

In May 2023, at the inception of the current floating exchange rate regime, the exchange rate was N460.70 – $1.  

The unified multiple exchange rate window was established to enhance efficiency in the FX market but initially, the rates significantly unraveled, dropping to N 1390.00 – $ 1 in May 2024 and then to an all time low at N 1,738.74  – $ 1 in November 2024 with the inflation rate at 34.8%. 

Heavy speculation between unlicensed persons in Naira and hard currencies resulted in unprecedented volatility and erosions in Naira values in turn causing major dislocations to domestic and foreign commerce in a still heavily import dependent economy.  

The situation was compounded by other factors including the removal by the Federal Government of fuel subsidies in 2023 and the prevalence of large volumes of Naira in circulation through monetary policies of the previous regime. 

Attempts to Stabilise Exchange Rates 

Significant attempts to stabilise the Naira and improve foreign exchange liquidity have been made. They include; most significantly, the clearing of the vast overhang of Nigeria’s due dollar obligations of approximately $7 billion. The clearing of the vast forward payment of $6.8 billion for Naira. The successful clearing of the aforementioned have given foreign investors comfort and confidence by easing prolonged pressure on the Naira, continually burdened by speculative demand for the dollar. 

There have also been oversight and regulatory and policy interventions by the CBN in the Official Market through a series of guidelines, such as the Central Bank of Nigeria’s (CBN) order to Banks to sell their excess dollar stock and maintain certain levels of prudential thresholds. 

Another key measure was the introduction in February 2024 of a new policy restricting international oil companies (IOCs) from repatriating 100 percent of their foreign exchange proceeds abroad immediately, limiting them to only 50 percent of their proceeds immediately while the other 50 percent will be repatriated 90 days from the day of inflow. 

Additionally, measures have also been taken to prevent foreign currency racketeering, foreign exchange rate manipulation, money laundering and the financing of terrorism by stopping the proliferation of unregulated transactions through robust monitoring a number of Bureaux De Changes (BDC), under the regulatory guidelines titled  “REVISED REGULATORY AND SUPERVISORY GUIDELINES FOR BUREAU DE CHANGE OPERATIONS IN NIGERIA.” 

 The aforementioned cluster of measures individually and cumulatively laid the foundation for the stabilisation of the foreign exchange market. 

Electronic Foreign Exchange Matching System (EFEMS) 

 The EFEMS initiative, which was officially introduced on October 3, 2024, represents the boldest and most far reaching move by the CBN to address longstanding issues of speculation and lack of transparency in the foreign exchange market. It encourages compliance with all rules that pertain to making the foreign exchange market open and transparent to investors. After a test run in October-November 2024, it became fully operational in December 2024.  

EFEMS requires all foreign exchange transactions to be conducted through this platform and therefore enables real-time order matching among banks and ensuring supply-demand data is openly available.  

The objective of EFEMS is to reduce speculative activities and eliminate market distortions, allowing the CBN to exercise regulatory oversight and effectively regulate the FX market. 

The CBN also launched the Nigerian Foreign Exchange (FX) Code, a comprehensive guideline aimed at ensuring transparency, integrity, and accountability among Authorised Dealers.  

The FX Code introduces six core principles: Ethics, Governance, Execution, Information Sharing, Risk Management and Compliance, and Confirmation and Settlement Process.  

The code supports the overall objective of EFEMS by mandating banks to show their real-time quotes and matching orders and promoting a fair and robust FX market, leading to more transparency and efficiency.  

The CBN Governor recently stressed that the reforms of 2023-2024 have yielded tangible results with remittances through International Money Transfer Operators (IMTOS) rising 79.4 per cent in the first three quarters of 2024 to $4.18 billion, compared to $2.33 billion in the same period of 2023.  

The positive effects of the foregoing basket of measures have been reflected in Nigeria’s external reserve, which grew by 12.74 per cent, reaching US$40.68 billion at the end of 2024. 

For further enquiries kindly contact the F.O. Akinrele & Co. Corporate, Foreign Investment and Capital Markets Group – info@foakinrele.com

Adam Smith, the famous Scottish economist and philosopher in “An Inquiry into the Nature and Causes of the Wealth of Nations”  espoused the virtues of the invisible hand of free markets with little governmental interference.  

The year 2022-2024 and so far in 2025, have witnessed geopolitical headwinds as demonstrated by international trade re-alignments and prevailing global trends towards protectionism between the US and her trading partners. Yet in line with Adam Smith’s core philosophy, Africa must act with renewed zeal and focus on establishing free markets and frictionless trade as epitomised by the African Continental Free Trade Area (AfCFTA) Agreement. 

The AfCFTA remains the world’s largest free trade area since the creation of the World Trade Organization (WTO).  

AfCFTA market projection is significant, with the combined GDP expected to reach US$7 trillion by 2035, and $29 trillion by 2050. The World Bank foresees an increase in foreign direct investment (FDI) in this trade area of up to 111% by 2035. 

The creation and evolution of AfCFTA commenced from the 10th Extraordinary Session of the African Union on AfCFTA in March 2018 where the following agreements were signed into law:  

i. The AfCFTA  

ii. The Kigali Declaration (Agreement)  

(signed by 54 out of the 55 African countries Eritrea being the only country not to have signed nor ratified)  

iii. The Protocol on Free Movement of Persons 

(signed by 32 out of the 55 AU Member States only 4 countries – Mali, Niger, Rwanda, and Sao Tome & Principe have ratified.  

The AfCFTA brings together 8 pre-existing and separate free trade areas and/or customs unions each with different regulations otherwise known as Regional Economic Communities (RECs). 

The 1st of January 2021, marked the start of trading under the AfCFTA.  

The African Continental Free Trade Agreement’s primary objective is to reduce trade barriers between the different RECs of the African Economic Community, and eventually to use these RECs as building blocks for the ultimate goal of an Africa-wide customs union. 

The year 2021 also saw the roll-out of the pilot phase of the Pan-African Settlement System (PAPSS), a combined initiative of African Export-Import Bank (AFREXIM) and the AfCFTA, which was formerly launched in Ghana on 13 Jan 2022.  

PAPSS serves as the continent-wide platform for the processing, clearing and settling of intra-African trades and commerce payments. The system was developed by the AFREXIM and promises to reduce the cost and time of payments, lower the level of banking liquidity required to make payments, and improve central bank oversight of payments. 

The PAPSS in the African regional context functions identically to and complementary to the Swift global payment system. Its objectives like Swift  are speed, cost savings, reliability and dependencies on hard currency. The PAPSS ensures instant or near-instant transfers of funds between originators in one African country and beneficiaries in another. 

Although the 1st of January 2021, marked the start of trading under the AfCFTA Agreement however, no trade has yet taken place under the AfCFTA regime.  

On 7 October 2022, the AfCFTA Secretariat launched the AfCFTA Guided Trade Initiative (GTI) in Accra to allow for commercially meaningful trade under the Agreement to commence for eight (8) participating countries: Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia. This initiative is being used to pilot the operational, institutional, legal and trade policy environment under the AfCFTA, and has since been extended and as at January 2024, 12 State parties have finalised their legal modalities to enable trade under the GTI to commence. 

The GTI is a pilot program that aims to test the legal, trade policy, institutional, and operational environment of the AfCFTA. The program focuses on value chain development and 96 commodities, including tea, coffee, ceramic tiles, processed meat, and sugar.  

The 54 members of the AfCFTA are at different stages of implementation and limited trade has occurred under the GTI. The GTI is a pilot program that matches importers and exporters.  

As at August 2024, 48 countries (including the 4 richest countries on the continent, Nigeria, South Africa, Egypt, Algeria) out of the 54 signatories have ratified the treaty. 

KEY OBJECTIVES 

In 2025, the AfCFTA aims to be fully operational. 

Its key objectives are:  

• A transition from its current foundational phase to full operationalization of a robust trade framework.: 
• Clear steps towards dismantling of barriers to cross-border commerce and the improvement of trade facilitation.  
• Implementation of protocols aimed at empowering women and youth. 
• Strengthening collaboration between AfCFTA member states.  
• The building of capacity in the key AfCFTA institutions to implement   
• Commitment by the AfCFTA Secretariat to a continental private sector platform for SMEs.  

 

KEY CHALLENGES 

A number of key challenges are: 

• Infrastructure gaps, financial constraints, and competition, which impede the expansion of businesses under the AfCFTA.  
• The implementation of the AfCFTA remains slow yet, there remains the potential to increase intra-African trade by more than half by the end of 2025. 
• Political instability through recent coups and political unrest across the Sahel and central Africa have dampened investor confidence and trade potential.  

OPPORTUNITIES  

The AfCFTA represents a major franchising opportunity in Africa, creating a larger, more connected market that could drive significant business growth.  

The AfCFTA through a large unified market will accelerate trade and investments with China and Europe. 

For further enquiries kindly contact the F.O. Akinrele & Co. International Trade, Shipping & Transport Group – info@foakinrele.com 

 

 

As part of our broader perspectives on F.O. Akinrele & Co’s practice areas, we are constantly presented with opportunities to influence legislation and forge a path towards better governance in the Nigerian commercial sector.

Over the past 12 months, our Transport Law Group has been engaged in several legislative initiatives exemplified by the following key federal and state public sector legislative initiatives in the Nigerian maritime and transport sectors: 

The Coastal and Inland Shipping (Cabotage) Act 2003 and the Suppression of Piracy and Other Maritime Offences (SPOMO) Act 2019.

The Cabotage Act 2003

The Cabotage Act primarily reserves the commercial transportation of goods and services within Nigerian coastal and inland waters to vessels flying the Nigerian flag and owned by persons of Nigerian citizenship. The Acts seeks to limit foreign participation in domestic coastal trade and promotes indigenous shipping.

SPOMO Act 2019 

The SPOMO Act aims to deter would-be offenders and protect the integrity of maritime activities. It was enacted in 2019 to combat the problem of maritime insecurity in Nigeria, by preventing and suppressing piracy, armed robbery and other unlawful acts done against a ship, aircraft and other maritime craft, including a fixed or floating platform. It defines acts of piracy, armed robbery at sea, and other unlawful acts perpetrated within Nigeria’s territorial waters and exclusive economic zone (EEZ).

Between 2023 – 2024, we were engaged to lead a critical review of both legislations by the Nigerian Maritime Administration and Safety Agency (NIMASA), the Nigerian government agency responsible for regulation and safety of shipping within the Nigerian maritime and coastal waters.  

The objectives were to substantially review and draft the terms and provisions of both enactments incorporating international best practices in view of new and developing challenges in various aspects of both laws, particularly in field of enforcement. 

The work culminated in the drafting of a Cabotage Bill (2023) and SPOMO Bill (2023) which have since been presented to the Nigerian legislature for debate and passage into law.

The Ogun State Transport Reform Bill

In 2023-2024, the Ogun State government (a state within the western region of Nigeria), through the Nigerian Infrastructure Advisory Facility (a partner to Adam Smith International) engaged our Transport Law Group to conduct a legal and regulatory review of the Ogun State Transport Reform bill. This required a review and appraisal of the institutional and governance structure of the Ogun State transport sector. 

The ultimate objective was to coordinate and enhance productivity and promote a viable concessioning and commercialization regime for the Ogun State transport sector. 

In examining this bill, the main observations were the need for more coherence in the unification of all the transportation organs of Ogun State and the review of extant laws in order to avoid a proliferation of laws and avoid conflicts between Ogun State’s extant transport laws and the Transport Sector Reform Bill. 

Our reform and appraisal report on the Transport Sector Reform Bill has been submitted to the Ogun State government for further legislative steps to be taken.

Participating in legislative initiatives such as this will remain F.O. Akinrele & Co’s priority for many years to come.

 Broader Perspectives and Achievements in 2024: “Corporate Social Responsibility and institution Building” 

The expansion and deepening of our practice areas and our regional goals remain our core objectives. These objectives have over the past two decades, coalesced with the broader perspectives of corporate social responsibilty (CSR), which include our strong commitment to institutions of higher learning in Africa. 

Over the past 12 months, our support for the Oil and Gas Bar of the University of Lagos and the Maritime Law Students Society of the Obafemi Awolowo University has been demonstrated through sponsorship and the involvement of our partners and associates in their key projects and activities. We have also incorporated their members into our extensive law internship programmes. 

A commitment towards such institutions as these and to future generations of lawyers and industry experts remain at the forefront of our practice initiatves. 

These institution building initiatives also act as a trigger to the improvements of our African institutions by enhancing their functions and changing the way people relate to each other in public activities. 

Our plan is to expand these initiatives on a yearly basis to West African institutions of higer learning and then on a regional basis to Sub-Saharan Africa and North Africa. 

Nigeria is Africa’s biggest oil producer but a marginal gas player. In March 2021, the Nigerian government declared the 2020s, Nigeria’s ‘decade of gas’.

The decade of gas policy has signalled Nigeria’s renewed focus on gas as the fuel of choice for powering Nigeria’s industrial ambitions. According to the plan, the Federal Government’s target is to deliver 10 projects that would significantly impact the economy; attract $14 billion in foreign direct investment, raise $12 billion in revenue through royalties and taxes, and create two million jobs by 2030.

Nigeria has the tenth largest gas reserves globally with an estimated 208 trillion cubic feet (tcf) of proven gas reserves according to the Nigerian National Petroleum Corporation, NNPC.

Despite this huge potential, gas production remains relatively low. In 2021, Nigeria produced 1.62 tcf of gas, 50.7 percent of which was exported as liquefied natural gas (LNG), behind Algeria (3.56 tcf) and Egypt (2.4 tcf) who have much smaller reserves.

Nigeria hopes to be a major supplier to Europe as the continent shifts away from Russian gas.

Yet significant challenges remain. Developing a holistic solution to help ensure energy access and security will require improving investor confidence in the sector. Developing a local gas market will require stakeholders and consumers to be confident that gas flows won’t stop abruptly.

The Decade of Gas so Far

Nigeria has implemented several policies aimed at increasing the domestic utilization of liquefied petroleum gas (LPG), compressed natural gas (CNG), and gas-to-power. Some have focused on reducing and commercializing gas flares and developing industrial gas markets.

Nigeria’s energy transition plan sees gas as a key transition fuel that will help meet energy needs in the short term.

In 2020, the NNPC began developing its most ambitious gas project, the Ajaokuta-Kaduna-Kano pipeline. The 614km pipeline is a massive $2.5 billion project that will transport gas from production centers in the south to industrial clusters and production centers in the north.

The pipeline will also provide gas for three planned thermal power stations in Abuja (1,350MW), Kaduna (900MW), and Kano (1,350MW) as well as feedstock for industrial production of petrochemicals and fertilizers. The project was slated for completion in the first quarter of 2023, but the NNPC has extended this timeline to the third quarter of 2023 due to what it described as security and terrain challenges. 

Other key projects being developed include a second Escravos to Lagos Pipeline System which will double the capacity of the current transport network improving supply to about 9 power plants located in its corridor. The Obiafu – Obrikom – Oben (OB3) gas line is also being developed and will improve supply to petrochemical industries. The NNPC’s ultimate goal is to ensure domestic gas utilization of 5 billion standard cubic feet (bscf) daily.

The government is promoting CNG as the key fuel for transport. In 2022, the NNPC announced a plan to convert about 500,000 petrol and diesel vehicles into CNG-powered and deploy 580 gas-filling stations over 18 months. This plan also extends to replacing small diesel and petrol-powered generators, the main energy source for off-grid and underserved customers, with gas-powered alternatives.

Overcoming Market Challenges

To fully achieve the benefits of these initiatives and projects, the government needs to provide solutions to some of the policy and market challenges that have hampered domestic gas utilization.

Gas-fired power plants constitute about 87 percent (about 14GW) of Nigeria’s total installed power generation capacity. However, plants routinely suffer from gas supply constraints. This challenge is linked to the overall lack of liquidity in the power sector and also to the fact that the domestic gas market is a regulated one. When power generation companies are unable to pay and the domestic gas pricing is unattractive, gas suppliers prioritize international buyers that can pay.

A related problem is that there is no incentive for these producers to invest in infrastructure for domestic gas supply. Investments will be limited to off-shore basins that are near export ports. Activated and enforced gas sale and purchase contracts are necessary to make gas projects bankable and spur private-sector investment.

Another key challenge that disrupts gas flow is the sabotage of pipelines by acts of vandalism. Although instances of vandalism have decreased from its height in the 2010s, it remains a huge issue that affects the country, costing money in not only lost products but also repairs. A 2014 report from the U.K.-based Stakeholder Democracy Network (SDN), notes that pipeline vandalism costs oil companies $14bn annually. In October 2022, NLNG declared a force majeure, citing the unavailability of major liquids evacuation pipelines due to sabotage and vandalism.

Developing a holistic solution to natural gas production and supply in Nigeria will ensure energy security and improve investor confidence in the sector. A holisitic solution that creates a thriving local gas market for the power sector will also require more confident stakeholders and consumers.

THE NIGERIA-MOROCCO GAS PIPELINE

A most significant Nigerian gas utilisation project is the Nigeria-Morocco Gas Pipeline which was proposed in a December 2016 agreement between the Nigerian National Petroleum Corporation (NNPC) and the Moroccan Office National des Hydrocarbures et des Mines (National Board of Hydrocarbons and Mines) (ONHYM).

The following are its key details:

• Capacity: 30 billion cubic m/year
• Length: 5,660 km
• Cost: US$25 billion

The pipeline would connect Nigerian gas to every coastal country in West Africa (Benin, Togo, Ghana, Cote d’Ivoire, Liberia, Sierra Leone, Guinea, Guinea-Bissau, Gambia, Senegal, and Mauritania), ending at Tangiers, Morocco, and Cádiz, Spain.

It would be an extension of the existing West African Gas Pipeline, which already connects Nigeria with Benin, Togo, and Ghana. Industry experts have stated that this is a preferred route rather than the Trans-Saharan Gas Pipeline, arguing that the Trans-Saharan Gas Pipeline would have to pass through a region with significant militant activity.

Upon completion, the gas pipeline will be the world’s longest offshore pipeline second longest pipeline overall. Based on the 25-year estimate given in 2017, construction will be completed by 2046. In June 2023 it was reported that Côte d’Ivoire, Liberia, Guinea, and Benin had signed agreements with Morocco and Nigeria to participate in the Nigeria-Morocco gas pipeline project. The signing ceremony took place at the Economic Community of West African States (ECOWAS) headquarters in Lagos, Nigeria, alongside the steering committee meeting for the Nigeria-Morocco gas pipeline project, which was attended by representatives from ECOWAS and all the relevant countries. Following this development, a total of ten states are now involved in the project, building upon the agreements previously signed with ECOWAS, Mauritania, Senegal, Gambia, Guinea-Bissau, Sierra Leone, and Ghana.