Analysts say the underinvestment and divestment can be attributed to the absence of a conducive environment to do business due to failed reforms to keep the industry on track.
Foreign investors, in the second half of 2023, shunned the Nigerian oil and gas industry as the sector failed to record any investments during the period.
According to an analysis by the National Bureau of Statistics (NBS), the sector recorded zero investments in Q2 2023 after recording investments worth $750,000 in the first quarter of the year.
Investments in the oil and gas sector started declining last year when an NBS report revealed investment in the sector had dropped by 92%.
The capital importation report, which covered details for 2022, revealed that foreign investments into the petroleum industry in the first six months of 2022 were 92% lower than the $33 million inflow recorded in the last six months of 2021.
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The total value recorded in Q2, 2023 stood at $1.03 million, which has also been recorded as the lowest since the second quarter of 2021, while $1.13 million was recorded as capital importation in the previous quarter – Q1 2023, indicating a drop of 9.04%.
According to analysts, the underinvestment and divestment currently noticed in the oil and gas industry can be attributed to the absence of a conducive environment to do business due to failed reforms to keep the industry on track.
Further breakdown of the data revealed that the sector which recorded the highest inflow was the production sector with $605.04 million. This represented 58.73% of total capital imported during the period.
This was followed by the banking sector, valued at $194.58 million (18.89%), and Shares with $68.63 million (6.66%).
When the destination was analyzed, the United States was revealed as the major source of capital importation during the period, with $271.92 million, and accounted for 26.39% of the whole. This was, followed by Singapore and the Republic of South Africa with $177.44 million (17.22%) and $136.95 million (13.29%), respectively.
