Nigeria has long held the title of Africa’s leading oil producer but signs are now suggesting a shift as neighbouring country Angola emerges as a new beacon of attraction for international oil companies (IOCs).

The surge in Angola’s popularity among investors highlights a significant challenge to Nigeria’s once-unassailable dominance in the continent’s oil landscape.

Data sourced from Angola’s National Oil, Gas and Biofuels Agency (ANPG) reveals an increase of 96 percent in investment in Angola’s oil sector between 2022 and 2023.

Over the past five years, investments totaling almost $50 billion have been recorded, with an additional $71 billion planned over the next five years.

This surge in investment underscores the growing confidence of international players in Angola’s oil market.

The aggressive industry reforms undertaken by Angola since 2017 have been instrumental in attracting investors.

These reforms aim to ensure transparency and competitiveness in the oil and gas market, a move that has resonated positively with foreign players.

The introduction of a six-year licensing round in 2019, guaranteeing yearly investment opportunities in exploration for foreign entities, has been a key feature of Angola’s reform agenda.

One of the most recent licensing rounds, covering 12 blocks in the Lower Congo and Kwanza Basins, saw an overwhelming response with 53 bids submitted, indicating the robust interest in Angola’s oil and gas potential.

José Barroso, Angola’s secretary of state for oil and gas, emphasized the country’s commitment to promoting the industry by aggressively pushing bid rounds aligned with national production targets.

Angola’s regulatory flexibility in oil and gas agreements has been another attractive feature for investors. The introduction of risk service contracts in 2020 as an alternative to traditional production-sharing agreements demonstrates Angola’s adaptability to industry dynamics.

Also, reforms such as the Tax Benefits Code enacted in 2022 aim to create incentives for oil companies operating in the country.

The stability and clarity of Angola’s policy framework have been highlighted as key factors driving investment decisions.

Patrick Pouyanne, CEO of TotalEnergies, pointed out the importance of policy consistency, noting that Angola’s stable framework played a pivotal role in TotalEnergies’ decision to invest $6 billion in the country.

While Angola’s star rises in the oil investment landscape, Nigeria faces challenges that threaten its status as Africa’s top oil producer.

Bureaucratic bottlenecks, contracting delays, and security concerns in the Niger Delta region have hindered Nigeria’s ability to attract and retain investors.

The inconsistency in policy making decisions has further exacerbated the situation, prompting some IOCs to explore more stable investment environments like Angola.

As Angola’s oil sector continues to flourish, Nigeria must address the underlying challenges that have dampened investor confidence.

The resurgence of Angola underscores the need for Nigeria to streamline its regulatory framework, enhance security measures, and foster a more conducive environment for oil investment to maintain its position as a regional powerhouse in the oil industry.

Failure to do so could result in further erosion of Nigeria’s dominance, paving the way for Angola to solidify its position as a formidable competitor in Africa’s oil market.

Oil prices declined by 1 percent amid the uncertainty surrounding the global oil market as the world looks to the Middle East for a solution.

Brent crude oil, against which Nigeria crude oil is priced, declined by 83 cents, or 1% to $82.88 a barrel, while U.S. West Texas Intermediate crude (WTI) slipped by 54 cents, or 0.7% to $79.26.

The backdrop of escalating U.S. inflation has cast a shadow over the global oil market as higher borrowing costs threaten to curb economic growth and subsequently suppress oil demand.

Ahead of the Memorial Day holiday, which traditionally marks the beginning of the U.S. peak summer driving season, retail gasoline prices have experienced a downward trend, falling for the fourth consecutive week to $3.58 per gallon on Monday, according to the Energy Information Administration (EIA).

Despite this, the underlying concerns regarding diminished consumer spending and fuel consumption linger, posing challenges for the oil market.

To address potential supply constraints, the U.S. announced plans to sell nearly 1 million barrels of gasoline from a reserve in northeastern states, with bids due on May 28, as disclosed by the Department of Energy.

This strategic move aims to mitigate any disruptions in gasoline supply, further underscoring the delicate balance between supply and demand dynamics.

Furthermore, U.S. diesel prices have witnessed a decline, down 5.9 cents per gallon on Monday to $3.89, according to the EIA. Diesel, a critical component in both the industrial sector and transport, reflects broader trends in economic activity and consumption patterns.

Investor sentiment remains cautious as they await key developments, including the release of Federal Reserve meeting minutes and U.S. oil inventory data from the EIA, scheduled for Wednesday.

Tim Snyder, an economist at Matador Economics, emphasized the importance of inventory data in shaping market sentiment, suggesting that a potential stock draw could provide support to oil prices within a defined range.

While geopolitical events, such as the tragic death of Iranian President Ebrahim Raisi in a helicopter crash on Sunday, have captured global attention, their impact on oil markets has been relatively muted.

The structure of the Brent contract has shown signs of weakening, indicating a softer market sentiment amidst robust supply conditions.

The narrowing of the front-month Brent contract’s premium to the second-month contract to 10 cents, its weakest level since January, further underscores the prevailing market dynamics and supply-demand equilibrium.

Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), has expressed optimism as the nation’s oil production approaches 1.7 million barrels per day (mbpd).

Kyari’s positive outlook comes amidst ongoing efforts to address security challenges and enhance infrastructure crucial for oil production and distribution.

Speaking at a stakeholders’ engagement between the Nigerian Association of Petroleum Explorationists (NAPE) and NNPCL in Lagos, Kyari highlighted the significance of combating insecurity in the oil and gas sector to facilitate increased production.

Kyari said there is a need for substantial improvements in infrastructure to support oil production.

He noted that Nigeria’s crude oil production has been hampered by pipeline vandalism, prompting alternative transportation methods like barging and trucking of petroleum products, which incur additional costs and logistical challenges.

Despite these challenges, Kyari revealed that Nigeria’s oil production is steadily rising, presently approaching 1.7mbpd.

He attributed this progress to ongoing efforts to combat pipeline vandalism and enhance infrastructure resilience.

Kyari stressed the importance of taking control of critical infrastructure to ensure uninterrupted oil production and distribution.

One of the key projects highlighted by Kyari is the Ajaokuta-Kaduna-Kano (AKK) gas pipeline, which plays a crucial role in enhancing gas supply infrastructure.

He noted that completing the final phase of the AKK pipeline, particularly the 2.7 km river crossing, would facilitate the flow of gas from the eastern to the western regions of Nigeria, supporting industrial growth and energy security.

Addressing industry stakeholders, including NAPE representatives, Kyari reiterated the importance of collaboration in advancing Nigeria’s oil and gas sector.

He emphasized the need for technical training, data availability, and policy incentives to drive innovation and growth in the industry.