This year has been a year of restructuring and chasing new opportunities in the energy industry. For Africa though, it has been a year of establishing new norms. The recent pandemic accelerated the industry's transformation, originally driven by small and medium companies over the past decade, thanks to energy majors turning to diversification and green power. 

 

Energy majors such as Shell, ExxonMobil, Total and Chevron, were acquiring most of the assets available in Central and West Africa, during the previous century. However, not every asset being awarded would end up being developed by them or even see initial investment, due to lower profit margins, smaller scale results, or simply different priorities at the time.

 

This resulted in an abundance of fields remaining undeveloped and inaccessible to smaller EPs that were eager to take available assets ripe for development. One of the biggest paradigm shifts  in Africa currently is the drive to tap into these resources.

 

Nigeria last conducted marginal field bid rounds in 2003, with 16 of the fields now contributing just two per cent to the national oil and gas reserves, a figure the DPR said would be substantially boosted by the latest exercise, worth about $500 million in signature bonuses. In this last bid round Over 600 companies registered to participate, with 161 becoming shortlisted, and 50% meeting all conditions. It is estimated that Nigeria received over $250 million in signature bonuses so far. Throughout the licensing round, over 24 indigenous companies were awarded marginal fields. 

 

However, the short oneyear window ofthe marginal round from announcement to the closing of bids led to companies forming specifically to apply and secure marginal fields, while existing local companies applied with enough capital to be awarded the acreage, but not to develop and monetize these opportunities. 

 

On top of this, the Covid pandemic slowed communications significantly, delayingfundraising efforts. Nigeria has a new influx of companies looking to raise a wide range of capital to develop and monetize the newly awarded fields.  This creates a window for investors looking for all sizes of opportunities, where they can invest in new opportunities in a mature but growing industry.

 

At the same time, with Nigeria’s green initiatives moving forward, investors can enter a country that will soon be divesting in an already energy-rich environment.