Role of FDI (Foreign Direct Investments) in the Efficient Development of Natural Gas Reserves to meet Africa’s Energy Security Demands
The role of FDI in the Nigerian oil and gas industry cannot be over-emphasized given the capital intensiveness of the industry. Since exploration for oil began in 1908, foreign companies have been instrumental in financing the exploration and production of oil and gas resources in Nigeria. The inflow of FDI in recent years has however dwindled due to global commitments to reducing greenhouse gas emissions and the drive by hydrocarbon resource-poor countries to reduce dependence on fossil fuels and accelerate the development of renewable energy.
In Africa, competition for foreign investments has increased due to the favorable legal, regulatory, and fiscal regimes in several countries and new discoveries of petroleum especially natural gas in countries such as Senegal, Mauritania, South Africa, etc. and others not known for their hydrocarbon endowment. A recent study showed that of the $70bn FDI in Africa between 2015 and 2019, Nigeria only attracted 4%.
With the recent passage of the PIA, the rebound of the global economy post-CoVID-19 pandemic, and the geopolitical crisis in Europe that has necessitated an increased global demand for oil and gas, can Nigeria reverse this trend and accelerate foreign investments to spur economic growth through exploration and production of its 208.62Tcf of proven natural gas reserves to achieve energy security?