Foreign direct investment outflows are expected to persist in Nigeria, according to the Economist Intelligence Unit (EIU). The EIU report highlights that local oil companies acquiring assets from exiting international counterparts may struggle to match their financial capabilities. The challenging business environment in Nigeria, characterized by corruption, cronyism, insecurity, and infrastructure deficiencies, contributes to multinational companies reducing their presence or leaving the country. The EIU predicts a continued net withdrawal of foreign direct investment in 2024 due to currency fluctuations impacting companies with significant foreign liabilities.
Several foreign oil firms, including Shell, ExxonMobil, Equinor, and TotalEnergies, are planning to sell their onshore assets in Nigeria to focus on offshore operations. This trend has been perceived by some officials, like Minister of State Petroleum (Oil) Heineken Lokpobiri and Imo State Governor Hope Uzodinma, as an opportunity for indigenous companies to enhance their capabilities in onshore and shallow water oil exploration.
The EIU anticipates a gradual indigenization of the oil sector in Nigeria as major companies divest from onshore fields, which are deemed high-cost and susceptible to security risks. While this shift could theoretically benefit the country’s foreign exchange reserves, local firms may struggle to match the financial capacity of departing multinational corporations. The report also projects a modest increase in Nigeria’s crude oil production from 1.23 million barrels per day in 2023 to 1.48 million barrels per day by 2028, still below the 2019 levels by approximately 250,000 barrels per day.
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