The International Energy Agency (IEA) has identified that despite Nigeria's significant oil and gas production and exportation, the country struggles with meeting rapidly growing energy demands and mobilising investment in the sector. To address these challenges, the IEA and Nigeria have launched a joint work programme aimed at enhancing energy security, investment, data, efficiency, and clean cooking. This initiative seeks to bolster Nigeria's energy infrastructure and ensure a reliable and affordable supply of electricity and clean cooking solutions.
Nigeria's fossil fuel industry has been a cornerstone of its economy for decades, with oil discovery dating back to 1956. The Nigerian National Petroleum Company Limited (NNPCL) collaborates with international oil companies to produce and export oil and gas, significantly contributing to the country's GDP. Recently, Nigeria's crude oil production reached a six-year high in June, averaging 1.56 million barrels per day (bpd), marking the largest average monthly production volume since April 2020.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) attributes the improved production performance to stable operations across most producing assets and the absence of major pipeline outages. In August, production levels continued to rise, fluctuating between 1.64 million bpd and 1.71 million bpd. The government's efforts to curb oil theft and sabotage in the Niger Delta have also played a crucial role in increasing crude production, with further growth targeted by 2030.
In addition to its oil production ambitions, Nigeria is committed to achieving its green transition goals by expanding its renewable energy capacity. At the 2021 COP26 climate summit, Nigeria pledged to achieve carbon neutrality by 2060 through its Energy Transition Plan (ETP). The plan projects that Nigeria's shift to domestic renewables could generate $686.8 billion in fuel cost savings by 2060, contingent on developing 277 GW of total installed capacity and over 104,000 mini-grids by 2030.
To support its renewable energy goals, the Nigerian government has made investments in the sector. In September, it pledged $5 million for renewable energy development and operation by PowerGen Renewable Energy Nigeria Limited. According to a report by Ember, Nigeria is expected to install 1.7 GW of solar power in 2026, representing a 45 per cent increase from 2025. The report also forecasts that Nigeria's solar-panel manufacturing output will triple in 2026 compared with 2024.
The Nigerian government is also exploring opportunities to develop its hydropower capacity, with only 2.5 GW currently connected to the grid. As the country aims to rapidly develop its renewable energy sector, it seeks to diversify its energy mix and establish itself as a major energy hub in Africa. This involves balancing its current focus on oil production with a concerted effort to expand renewable energy sources.
Nigeria's ambitious energy plans for the coming decades include both expanding its oil industry and accelerating the development of renewable energy sources. The successful implementation of these plans will depend on addressing current challenges, including poor investment in the power and clean cooking sectors. The IEA's collaboration with Nigeria is a step towards addressing these issues and ensuring a sustainable and diversified energy future for the country.
Key points
- The IEA and Nigeria have launched a joint work programme to enhance energy security, investment, and clean cooking.
- Nigeria aims to achieve carbon neutrality by 2060 through its Energy Transition Plan.
- The country targets significant growth in renewable energy, including 1.7 GW of solar power by 2026.
