$25 Billion to Keep the Lights On: Energy Insights and Key Takeaways from NNPC-RTI Webinar

😊 Hello and welcome to another edition of the Energy Business Analytics Newsletter. This edition is based on the presentation of the keynote address delivered at the NNPC’s Research, Technology and Innovation [RTI] division’s quarterly webinar. Some aspects of this article have been enhanced from the presentation for better clarity.

KEY TAKEAWAYS

• The Energy Transition Is Slower and Costlier Than Expected: Instead of replacing fossils, the current trajectory is one of “energy addition” with gas as a key transition fuel.
• Divergent Forecasts Create Policy Uncertainty: Agencies like the IEA, EIA, and OPEC present vastly different views of future demand and fossil participation, complicating planning.
• Nigeria Needs $20–$25 Billion Annually to Sustain Oil and Gas Production: Upstream investment has sharply declined, and capital infusion is critical to reversing declining trends.
• Big Oil’s Strategies Reflect a Cautious, Profitable Path Forward: Shell, Exxon, and Aramco are balancing capital discipline, emissions reduction, and traditional oil production, influencing Nigeria’s energy asset divestments.
• Energy Equity and Access Are Central to Development Goals: The stark disparity in energy consumption per capita reveals the developmental urgency for countries like Nigeria.

INTRODUCTION

This article is based on the keynote presentation titled “Sustaining Production in a Dynamic Energy Landscape” which I delivered at the NNPC-RTI Quarterly Webinar. The webinar’s theme captioned "Secure the Future: Sustaining Production in a Dynamic Energy Landscape" was held April 15th, 2025.

The webinar’s theme is indeed timely as we are challenged by a dynamic energy landscape not only in the upstream segment, but also across the energy value chain.

In this piece, I will delve into the key factors shaping the energy landscape. I will explore the challenges to the energy transition, the demand/supply picture, and strategies for sustaining production in this dynamic environment. The strategies to sustain production are specific to Nigeria but are also applicable globally.

Let’s dive in!

SETTING THE SCENE

Fundamentally, there is a frame of seven factors by which we can define the energy landscape:

1.    Energy Transition

2.    Energy Demand

3.    Oil Price

4.    Energy Supply

5.    Geopolitics

6.    Divergent Outlooks [from the energy analytics agencies]

7.    Energy Company Strategies

So, these seven factors interact in a complex web to shape the contours of the Energy Landscape. Last year, I would have highlighted post-Covid effects, the Russian-Ukraine war, Energy transition, convulsing oil prices, slowing oil demand as hall marks of the dynamic energy landscape.

This year would be different – only slightly.

While the seven factors above are fundamental, and the hallmarks identified are still relevant, we have a new vector on the scene, in the person of the current President of the United States, Donald J. Trump.

He arrived with the mantra “Drill, baby, Drill” and in his 80 days in office has unleashed a whirl wind of executive orders. These orders could have profound long-term impacts on global markets, the environment, and America’s global standing. It is worth noting that six out of the first forty-six executive orders were energy-focused:

1.    Withdrawal from the Paris Climate Agreement

2.    Broad order on energy [Fast-Track LNG Projects]

3.    Prioritize approvals for critical energy infrastructure.

4.    Open federal lands for drilling.

5.    Seek a way to lower consumer energy prices.

6.    Halt offshore wind leasing.

Recently, the President issued an executive order to remove barriers to coal development in the United States.

He also initiated a trade war by issuing tariffs, counter-tariffs with immediate reaction on the market. The S&P 500 index fell in 5 days from 5,671 index points on the day the tariffs were announced April 2nd to 4,835 on April 7th and then corrected to 5,457 on 9th April when the tariffs were paused.

The reaction of the markets led to a wipeout of $10 trillion in market capitalization.

From a geopolitical angle, electoral outcomes, Middle East tensions, and other theatres of war are playing their part in generating so much uncertainty and dynamism. Amidst all these challenges, those that are energy poor in the emerging economies are still struggling to get their voices heard over the din of the energy conversation.

The resulting landscape is thus: volatile, uncertain, complex, and ambiguous.

THE ENERGY TRANSITION REALITY CHECK

Worldwide Interest in “Energy Transition” has tripled since April 2020. In that period, the term “energy transition” experienced a very huge interest, as illustrated in the graphic below.

Note the slow growth in interest prior to April 2020, after which a sharp uptick is seen.

However, there are challenges encountered by the transition, and it is currently undergoing "reality checks" such as:

1.    US pullout from the Paris Climate Agreement.

2.    Court’s $660 Million verdict against Greenpeace.

3.    Lagging implementation of carbon policies.

4.    Spiking energy prices in Europe.

5.    Germany’s coal plants restart.

6. The UK is importing coal from Japan to run a steel mill.

7.    IEA accused of climate advocacy.

8. The unforeseen high cost of transitioning is beginning to show.

9. The energy transition increasingly looks like an “Energy addition.”

The map from the Carbon Tracker shows the countries lagging on climate change commitments.

Climate Action Tracker indicates that most of the world is taking insufficient to highly insufficient steps to meet Paris climate goals.

85% of global emissions and ~ 70% of global population are covered by this policy tool.

ENERGY DEMAND: HEADING UP, BUT WHAT ABOUT FOSSILS?

Whichever agency’s Outlook you swear by the general trend is a clear increase in energy demand. We're looking at 902 exajoules, the IEA comes as low as 720 EJ. And even when we consider the role of fossils in a 2050 energy mix, the share is also varied from as low as 58% [IEA] to 70% [EIA]. These differences point to deeper differences between the agencies, which we will touch upon shortly.

The International Energy Agency (IEA) in their 2025 Global Energy Review reported that global energy demand grew by 2.2 percent in 2024, faster than the average rate in the last ten years. So, you can see that energy demand is really, really taking off, and fossils are a part of that growth.

So, in all these things, what is the demand outlook for oil and gas? Again, there are different viewpoints; OPEC sees oil demand at 120 MMbpd, U.S. Energy Information Administration is 110 MMbpd, the IEA sees it at 97 MMbpd. For gas, we see that the EIA and the OPEC are seemingly closer than the IEA, and you can tell that the IEA has a vastly different view of what fossil participation is going to look like going forward.

The key takeaway from here, however, is that though energy demand is increasing, there are divergent views around the role that fossils will play.

The IEA’s Energy and AI report [2025] posits that gas, is increasingly seen as a key component to meet increasing electricity demand, especially brought on by demand for AI and digital services, which is going to be critical.

THE SUPPLY SIDE: US DOMINANCE AND SHIFTING DYNAMICS

Global energy supply has also experienced significant reconfiguration, with the US now becoming a dominant oil producer and LNG exporter. The US has overtaken Russia [10 MMbpd] and Saudi Arabia [9 MMbpd] to produce 13 MMbpd. In 2023, the US exported 12 Bcfd of LNG, worth $34 billion overtaking Qatar and Australia to become largest LNG exporter globally.

Given that the US is now both a major consumer and producer at the same time, high oil prices have a mixed effects on the US. Consequently, high oil price is both good and bad for the US – good for “drillers,” bad for “consumers” and politicians.

In addition to the top oil and gas producers, several emerging players are now contributing to the supply pool thus diversifying the sources of supply - Guyana, Mozambique, Namibia, Senegal.

Cost of Supply, Reserves ranking, OPEC+ production decisions, demand outlook, and above-ground risks are some of the other factors that determine energy supply.

DIFFERING PERSPECTIVES AND STRATEGIES

Contrasting views on the energy transitions and evolution of forward-looking energy demand and energy mix emanate from organizations like the EIA, OPEC and IEA. The views expressed by these organization play a major role in shaping government policies around the world, investment decisions by companies, and public perception of the energy industry.

Figure 8 is a sampling of quotes from some of the lead actors illustrating their contrasting perspectives.

In a previous article, I had detailed the differences between these agencies’ outlooks and the source of those differences.

To further add to the conversation, several headlines captured below convey the collage of viewpoints on the role of fossils in the energy transition.

So how are major energy players/producer companies responding to these dynamics? We examine the strategies of key energy companies – Shell , aramco , and ExxonMobil and find that the following themes run through their strategy playbooks:

• Capital discipline.
• Low-carbon gas development,
• Increasing shareholder returns and
• Maintaining their competitive advantage in oil production

The Shell strategy theme “More Value with Less Emissions” conveys the company's focus on targeting high-return, low-carbon-intensive plays. An extract from Shell’s Strategic Report 2024 shows the company’s strategy hinges on:

• Growing integrated gas and LNG business
• Sustaining liquids [oil] production of at least 1.4 MMbpd to 2030
• Renewables and energy solutions to drive cashflow resilience and higher returns.

Saudi Aramco’s strategy revolves around:

• A focus on upstream preeminence
• Achieving downstream integration
• Promoting local national champions [a local content drive]
• Pursuing lower carbon initiatives

ExxonMobil’s playbook includes:

• Increase upstream production from low-cost assets.
• Achieve $7 billion in structural savings.
• Pursuit of $30 billion low carbon projects 2025-2030

These strategies of the global players have had direct local impact on the Nigeria energy scene. The recent wave of asset divestments to indigenous players were hinged on reasons of global energy transition goals, capital reallocation and regulatory changes. Isn’t it telling for example that Shell divested its high emissions intensity onshore assets, while keeping its stake in the Nigeria LNG - NLNG ?

THE INVESTMENT IMPERATIVE

Continued upstream CapEx is required to ensure steady oil and gas supply. In the last decade, investment in upstream oil and gas has been in decline. Data from OPEC as well as the International Energy Forum (IEF) , show global upstream investment rose from ~ $450 billion in 2009 to peak in 2014. Investment declined by 55% from 2014 to ~$400B (2021).

Regionally, the bulk of investment has flowed to North America followed by Asia, while Africa has typically received a sliver of global investment.

To keep the lights on, Austin Avuru– 40+ year industry veteran and recent appointee to the board of the NNPC Limited weighed in on Nigeria’s upstream CapEx requirement. He is quoted to have said the oil sector required between $20 billion and $25 billion annually to stabilize Nigeria’s production at 2 MMbpd of oil and 10 Bcfd of gas.

In 2009, Nigeria’s CapEx spend was $56 for every $1,000 of global spend. This declined to $16 for every $1,000 of global spend in 2021. The $20-$25 billion referenced by Austin Avuru is comparable to the high-water mark of Nigeria’s capital spend which occurred in 2013 and 2014.

However, to guarantee supply, upstream sector requires $11.1 trillion in the 2023–2045 outlook period, or $480 billion p.a. (in 2023 US dollars). Investment requirements in OPEC Countries quadruple, from $35 billion p.a. in 2022, to $136 billion p.a. in 2045 – according to OPEC.

ENERGY ACCESS AND DEVELOPMENT

The low energy consumption faced by developing economies, is a major impediment to their economic growth. The chasm between the economic well-being of countries can be traced to their per capita energy consumption. On the left chart of Figure 11 is a plot showing the strong positive relationship between per capita energy consumption and economic growth.

Countries with higher energy use per capita tend to have a higher GDP per capita.

The right-hand chart illustrates the opportunity there is to close gap in per capita use energy use in Nigeria at 780kgOE/capita compared to South Africa’s at 2,694kgOE/capita.

The importance of closing the energy gap for economic development cannot be overemphasized.

Keeping the Lights on

For Nigeria, keeping the lights on – both literally and figuratively – means reversing trends that have been downward facing for at least two decades. Figure 12 is an illustration of growth trends in Nigeria’s oil and gas reserves, oil and gas production, and refining capacity utilization.

Since 2006, oil reserves “plateaued” at 2.2-times their level in 1990. Oil production in 2023, is now less than [about 90%] its level in 1990 of 1.8 MMbpd. Refining utilization declined from its 1990 level of 64% to nearly 0% just before the start of the Dangote Refinery.

On gas, we see that gas reserves currently are at 2.1-times the level of 100 Tcf in 1990 and have been on the increase since 2014. Gas Production has been volatile in last 2-decades. Currently at 2.5-times its 1990 level of 2.75 Bcfd.

To drive home the point about Nigeria’s oil consumption needs, consider that Africa which has the lowest annual oil consumption per capita globally at 1.0 bbl/person requires 10 MMbpd more oil to reach per capita consumption parity with Asia Pacific. The Asia Pacific region at 3.5 bbls/person is the second lowest per capita oil consumption globally.

SUSTAINING PRODUCTION: THE WAY FORWARD

Previously, efforts through policy have been made to arrest the decline and volatility in oil and gas production. These efforts can be grouped into three buckets:

1.    Sector Reforms

2.    Energy Transition Strategy

3.    Asset Management

Figure 13 details some policy specifics which have mostly been targeted at improving the business environment and thus attracting investment.

The continued importance of oil and gas, the need for efficiency, technology, cost management and governance are imperatives to keep production going. Consequently, the strategic levers to secure the future and sustain production, recognizing factors of energy transition and domestic challenges, are listed as follows:

1.    Capital Infusion

2.    Integration of Operations

3.    Sector Reform

4.    Energy Security

5.    Economy-wide Efficiencies

6.    Innovative deployment of Technology

Figure 14 is an extract from the keynote slide, which provides further detail on each of these levers.

CONCLUSION

There is little doubt that the energy landscape is characterized as volatile, uncertain, complex and ambiguous (VUCA). It is defined by the energy transition, demand and supply, oil price, geopolitical tension, divergent outlooks, energy players’ strategies, and now the emergence of President Trump.

My view is that while energy transition is a significant feature of the energy landscape, it is not progressing as envisaged. It is slower, is more of “energy addition,” costlier than estimated and still carries geopolitical risk. This realization creates room for “stronger-for-longer” oil and gas demand against the wider context of increasing energy demand. However, players are responding cautiously. Companies have been increasing dividends to shareholders, promising capital discipline, seeking low-cost supply opportunities, while still pursuing some low-carbon opportunities via gas.

The effect of this cautious strategy is also playing out in the Nigeria energy landscape evidenced by divestment of high carbon-intensive assets, and decline in Nigeria’s share of global CapEx. This comes even as capital infusion is critical to “keeping the lights on,” achieving efficiencies, deploying digital technologies while honouring climate change commitments.

While industry players must aim for cost-efficiencies, honour fiscal obligations, and strengthen governance processes, the government will inevitably come under pressure to provide further incentives. The argument will be made in the name of “National Interest.”

This article is based on the keynote presentation made on April 15th, 2025, at the NNPC-RTI Quarterly Webinar. If you enjoyed this edition of the Energy Business Analytics newsletter, please subscribe for more content like this!