Nigerian shift back to deepwater oil raises environmental concerns

Nigeria’s deepwater oil production contributes significantly to the oil and gas sector and accounts for over 40% of total daily oil production. The country has 83 deepwater oil and gas blocks with cumulative output from deepwater of 3.2 billion barrels.

In 2024, Nigeria underwent significant reforms to boost its attractiveness for investments in Nigeria’s offshore fields. These reforms included restructuring the upstream and midstream sector through policy directives to attract investments and enhance energy delivery to both global and local markets.

In 2024, the Nigerian President Bola Tinubu approved five major acquisition requests, freeing up onshore fields for new indigenous companies to invest in and grow production.

Last December, Shell announced a final investment decision in Bonga North, a deepwater project off the coast of Nigeria.

Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director said it is “another significant investment, which will help us to maintain stable liquids production from our advantaged Upstream portfolio.”

Bonga North will “help ensure Shell’s leading Integrated Gas and Upstream business continues to drive cash generation into the next decade,” she added.

Last year, Total Energies/NNPCL invested $550 million in the Ubeta non-associated gas project. ExxonMobil also proposed a $10 billion investment in Nigeria’s deepwater oil operations.

At the 9th Sub-Saharan Africa International Petroleum Exhibition and Conference, held in Lagos last month, Ronald Adams, Managing Director of Shell Nigeria, highlighted the importance of deepwater investments for Nigeria to meet its oil production targets and realise ambitious development programmes. He said the fields can play a vital role in powering Nigeria’s future, supporting cleaner energy, and contributing to global emissions reduction.

“This will require a favourable investment climate to attract capital and innovation to develop these gas resources responsibly and sustainably, ensuring long-term benefits for the country in meeting its energy and global sustainability goals,” he added.

While the Nigerian government and other officials claimed the new interest in offshore will support cleaner energy and contribute to reducing global emissions, experts have noted that the implication of international oil companies moving to offshore could lead to more oil spills and have catastrophic effects on marine ecosystems.

Investor confidence

Etulan Adu, a production engineer at Italian oil major Eni, told Gas Outlook that deep-water projects are strategic and critical to meeting Nigeria’s oil production targets and implementing ambitious development plans.

He said that, given the large capital and advanced technology involved in developing these assets, investors consider deep-water projects to be lucrative opportunities that will significantly improve the country’s energy sector and overall economic outlook.

“Additionally, deep-water exploration and production necessitate modern technologies and skills, attracting investors looking for cutting-edge solutions and new methods. This demonstrates confidence in Nigeria’s ability to properly tap deep-water oil and gas reserves.”

Adu noted that by committing to deep offshore investments, investors are demonstrating their confidence in the long-term viability of Nigeria’s oil and gas industry. This, he said, demonstrates a unified goal for long-term growth, strategic planning, and ongoing engagement among the government, industry stakeholders, and investors.

Katlong Alex, an energy sustainability analyst at the African Energy Council, also added that deepshore investment signals renewed investor confidence. It demonstrates that Nigeria’s recent regulatory reforms — particularly the Petroleum Industry Act — have materially de-risked deepwater projects. He said in an era of shifting geopolitical alliances and increased pressure to reduce carbon footprints, these investments demonstrate Nigeria’s commitment to transforming its energy sector responsibly.

“Ultimately, deep-shore investments send a clear message: Nigeria’s energy sector is on a transformative path, driven by sustained policy improvements and technological advancements that foster innovation and economic growth. This renewed confidence will attract further capital, driving long-term commitment and positioning Nigeria as a key player in the global energy market,” he added.

Attracting capital

Adu noted that a favourable investment climate is paramount for attracting capital and fostering innovation, which in turn ensures the responsible and sustainable development of oil and gas resources that benefit the Nigerian population. He said the investment climate assures sustainability, which can be achieved when governments and industry stakeholders encourage responsible resource development that balances economic growth, environmental protection, and social well-being.

“Consequently, a supportive regulatory framework, clear legal requirements, and effective governance procedures foster investor trust and confidence by demonstrating a commitment to maintaining the sector’s integrity, accountability, and ethical standards. This trust is required for long-term collaboration and ongoing investment in resource development projects. Guyana’s offshore oil and gas sector is a testament to the above supportive regulatory framework with IOCs.”

Alex emphasised that creating a favourable investment climate is critical for attracting the capital and innovation needed for responsible, sustainable development. He said a stable and transparent regulatory framework — bolstered by robust policies like the Petroleum Industry Act— reduces investor risk and signals a firm government commitment to long-term growth, thereby stimulating both domestic and international investment.

“This environment encourages the adoption of cutting-edge technologies and best practices, ensuring resource development aligns with global sustainability standards. In Nigeria, such an approach not only unlocks the vast potential of its energy resources but also drives local capacity building, job creation, and technology transfer.

“By mitigating uncertainties and offering clear fiscal and operational incentives, a conducive investment climate empowers the energy sector to become resilient and competitive, ultimately catalysing economic development, social progress, and environmental stewardship.”

Offshore environmental concerns

The National Oil Spill Detection and Response Agency in Nigeria reported significant gas flaring in 2022, which resulted in the loss of valuable natural gas and significant carbon emissions. The flaring cost approximately $0.79 billion and increased greenhouse gas emissions by around 12 million tons.

Adu raised concern that offshore oil projects in Nigeria, like those in many other nations, can produce greenhouse gases from the exploration through to the production phase such as flaring, venting, and fuel combustion. He highlighted the need for enhanced infrastructure and gas collection systems in Nigeria’s oil and gas industry, despite commitments to reach net zero by 2060.

“The flaring and venting of natural gas during offshore oil production releases greenhouse gases such as carbon dioxide and methane into the atmosphere, contributing to global warming and climate change. These pollutants can contribute to air pollution and have long-term negative effects on the environment both locally and globally.”

He said oil spills could occur as a result of accidents, equipment failures, or inadequate safety precautions during offshore oil drilling and production activities. “Oil spills disrupt marine ecosystems, endanger wildlife, disrupt fisheries, and ruin coastal habitats, all of which have an impact on biodiversity and local livelihoods. The Niger Delta region has suffered from spills from decades of operations of major oil companies.”

Jide Pratt, a Country Manager at TradeGrid, also added that deep offshore production is undoubtedly a climate concern. He told Gas Outlook that he believes Nigeria should transition on its own terms to reduce energy poverty while being mindful of environmental impacts.

“So cleaner ways of exploration with environmental impact assessments done thoroughly, ways of reinjecting gas that is flared into generation of power for oil activity. Enabling gas commercialisation so infrastructure around gas being flared is developed and the investment can be returned. Health, safety, and environmental considerations are extremely important and must be given the utmost attention for offshore activity to prevent primarily leakages that lead to oil spills and pollution which affects marine life.”

Adu said to mitigate these impacts, stakeholders must prioritise environmental protection, sustainable practices, and effective regulatory oversight.

“Implementing safety measures, pollution prevention strategies, environmental monitoring programmes, and community engagement can help achieve a balance between energy development and environmental conservation for present and future generations,” he concluded.

(Writing by Samuel Ajala; editing by Sophie Davies)