Nigeria’s struggling oil production, hovering around 1.2 million barrels per day (bpd), will require an additional $25 billion investment to hit the projected two million barrels per day, stakeholders have said.

The Executive Chairman, AA Holdings, Austin Avuru, said Nigeria can achieve a production capacity of three million bpd and 10 billion cubic feet per day (BCFD) of gas with the effective participation of the international oil companies (IOCs), independent operators and small-scale operators.

He made this known during his presentation at the Harvard Business School (Association of Nigeria) event in Lagos, themed, ‘Exit, Divestment and New Players: The Future of the Nigerian Oil and Gas Industry in the Hands of Indigenous Players’.

Avuru mentioned that for Nigeria to achieve this desired result, an effective regulatory action plan is needed, with what he described as “Drill or drop” enforcement, regular, transparent licensing rounds, leveling the playing field for entries and exits and re-establishment of execution capacity.

He added that a reinvention of NNPC, efficient manager (not Operator) of vast assets and functional, value-driven partnerships would also enhance the intended capacity.

“The new presidential orders will help rebuild execution capacity, rekindle deepwater development, rekindle gas development and address the shortfalls of the local content campaign,” he said.

Speaking on investments, Avuru said the sector needs about $20 to $25bn annually to stabilise production, stressing that oil and gas investments have been muted for too long.

He went on to list that those who should manage the process for a smooth transition from majors to independents, turned it into an approval power play, being one of the reasons for the decline in production. He stressed that political connections, rather than capacity, became the qualifying criteria, in the absence of guidelines and defined processes.

He revealed that between 2010 and 2022, Chevron and Shell divested a total of 20 assets to 15 Nigerian independent companies, adding that between these 15 indigenous independents, the gold assets are no more than eight billion barrels.

He however noted that the decline in production is linked to the decline in investments, stating that the general story being currently peddled is that all of the difference is due to crude theft.

He revealed that from a high of $22 billion a year, the industry is down to between $4 and $6 billion a year, adding that when there is no investment, no drilling, and no work done, the decline is a natural consequence to be expected.

“There are assets that have huge potential doing much less than what they should be doing and we’ll come to see what the reasons are. When you add up these 13 assets, we have a shortfall of almost a million barrels, which means if all of these 13 assets were performing optimally, we should be doing about 1.7 million barrels a day. If you then add 700,000 barrels from the deep onshore, we should still be doing 2.5 to 2.6 million barrels a day and there are a few other assets not doing that. What’s responsible for this underperformance?” he queried.

Chairman, ND Western, Dr Layi Fatona, said in the current era of decarbonisation, capital allocation and capital utility have remained poor, hence, global financial institutions and money providers are not investing or funding oil and gas.

He stressed that one of the key challenges identified is the need for adequate financing and investment to support the operations of independent companies and called for increased access to capital, improved regulatory frameworks and supportive government policies to facilitate it.