Nigeria maintained its position as Sub-Saharan Africa’s leading destination for upstream oil and gas investment in 2025, attracting $5.3 billion in capital expenditure despite an 18 percent decline in spending across the broader region, according to data from Wood Mackenzie.

The West African nation secured one of only two final investment decisions (FIDs) recorded across Sub-Saharan Africa last year, marking a dramatic reversal from its historical underperformance in capturing continental energy investments.

The Shell-Sunlink HI Field (OML 144), a shallow-water non-associated gas project, reached FID following Nigeria’s Non-Associated Gas incentives issued in 2024. The decision restores commercial viability to the project and unlocks critical gas feedstock for Nigeria’s liquefied natural gas sector, representing a significant milestone in the country’s effort to monetise its vast gas reserves.

Angola, Nigeria’s traditional rival for African energy investments, secured the second position with upstream capital expenditure exceeding $500 million. The nation’s investment was dominated by national oil company projects and major international operators, though it trailed significantly behind Nigeria’s total.

The figures represent a remarkable shift in Nigeria’s competitive position within African energy markets. Between 2015 and 2023, Nigeria captured just 4 percent of sanctioned African FIDs, securing only $5 billion across six of 44 projects continent-wide. Over the past two years, however, the country has attracted 38 percent of African upstream investments, totaling $8 billion across five of eight projects.

Industry analysts attribute this turnaround to decisive policy reforms implemented over the past 24 months. Nigeria now offers among the most competitive deep-water fiscal terms globally and the most attractive gas terms in Africa, according to Wood Mackenzie’s assessment.

The reforms have addressed longstanding concerns from international oil companies about regulatory uncertainty, contract sanctity, and fiscal competitiveness that had deterred investment for nearly a decade. The 2024 Non-Associated Gas incentives specifically targeted projects that had stalled due to economic challenges, providing enhanced returns for developments focused on domestic gas supply.

The broader Sub-Saharan African upstream sector faced headwinds in 2025, with total capital expenditure declining 18 percent year-over-year. The scarcity of FIDs, only two across the entire region, reflects ongoing challenges in competing for global energy capital amid energy transition pressures and attractive opportunities in other basins.

Congo, Mozambique, Uganda, Côte d’Ivoire, Ghana, and Gabon rounded out the list of countries with upstream capital expenditure exceeding $500 million. Wood Mackenzie’s data shows Mozambique’s spending focused primarily on LNG developments, while Congo’s investments diversified across multiple project types, including national oil company projects, major operators, and mid-sized independent companies.

The concentration of investment in Nigeria and Angola, which together accounted for the vast majority of regional upstream spending, underscores the importance of stable fiscal regimes and established infrastructure in attracting capital. Both countries benefit from decades of oil and gas development, extensive existing infrastructure, and proximity to key export markets.

Looking ahead to 2026, Wood Mackenzie expects additional FIDs in Nigeria supported by targeted incentives and a stable, investor-focused policy framework. The country’s momentum appears sustainable as reforms continue to mature and demonstrate their effectiveness in attracting international capital.

The Nigerian government’s approach of combining competitive fiscal terms with regulatory stability has created what industry observers describe as a “new normal” for the country’s oil and gas sector. This stands in sharp contrast to the previous decade, when policy uncertainty and above-ground risks consistently undermined the country’s natural advantages in reserves and infrastructure.

For the broader Sub-Saharan African region, Nigeria’s success offers both a template and a competitive challenge. Other nations seeking to attract upstream investment will need to match or exceed Nigeria’s fiscal competitiveness while addressing their own above-ground risks and infrastructure constraints.

The regional decline In overall spending, however, reflects broader structural challenges facing African upstream sectors. As global energy companies navigate the energy transition and allocate capital to lower-carbon projects, African nations face intensifying competition for a shrinking pool of conventional oil and gas investment.

Nigeria’s ability to capture a growing share of this declining total suggests that in an increasingly competitive environment, policy reforms and fiscal competitiveness matter more than ever in determining which nations secure scarce energy capital. (BusinessDay)

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