Nigeria expects to see "significant investment flow immediately" from Saudi Arabia after the top crude producer in the Middle East and Africa's largest oil producer signed investment and cooperation agreements in the energy sector at a summit in Riyadh last week.
Nigeria has been looking to attract foreign investment in its upstream and downstream sectors, while Saudi Arabia has recently launched its "Empowering Africa" initiative to bring cleaner energy, connectivity, e-health, and e-education solutions to African countries.
The total Saudi investments in Nigeria, including in the energy sector, could be worth several billion U.S. dollars, Nigerian minister of budget and economic planning, Abubakar Atiku Bagudu, told Bloomberg in an interview after a bilateral round table in Riyadh.
"We expect to see significant investment flow immediately," Bagudu said.
Last week in Riyadh, Nigerian President Bola Ahmed Tinubu met with Saudi Arabia's Crown Prince Mohammed bin Salman and reviewed the bilateral cooperation and coordination in various fields.
The energy ministers of several African countries, including Nigeria, signed memorandums of understanding with Saudi Arabia at the Saudi-Africa summit.
The Kingdom pledged to invest in the overhaul of Nigeria's oil refineries, which have been struggling to meet fuel demand, leaving Africa's top crude oil producer in a position to have to import fuels. The four currently operating Nigerian refineries have been in dire need of upgrades for years.
Nigeria could still be months away from full commercial operations at its huge new refinery, Africa's biggest. The Dangote Refinery, with a capacity of 650,000 barrels per day (bpd), has been commissioned, but full-scale production, including production of gasoline for Euro/pe, is not expected to begin until the second half of 2024, analysts have told Bloomberg.
After years of delays and massive cost overruns, Nigeria finally saw the giant oil refinery commissioned in May. The Dangote Refinery, built by the group of the same name of Africa's richest person, Aliko Dangote, was inaugurated by Nigeria's former President Muhammadu Buhari before he left office at the end of May.
The government hopes the new refinery will alleviate a chronic fuel shortage that has turned Africa's biggest oil producer into a fuel importer. Nigeria, OPEC's top crude oil producer in Africa, has had to rely on fuel imports due to a lack of enough capacity at its refineries, some of which had to undergo refurbishment in recent years.
The agreements with Saudi Arabia could accelerate Nigeria's refinery overhaul.
Commenting on the Nigeria-Saudi deals, Nigerian Oil Minister Heineken Lokpobiri said the memorandum of understanding is aimed at "promoting collaboration and strengthening our partnership in the oil and gas sector for mutual benefits."
"From this, we can anticipate enhanced technological exchange, investment inflow and a strengthened strategic partnership, paving the way for sustainable growth and prosperity in our energy landscape."
Nigerian President Tinubu, for his part, noted that he had assured investors at the Saudi-Africa Summit of Nigeria's "commitment to a stable, profitable business environment."
"We are ready for change, ready for investment, ready for growth, ready for business," the Nigerian President said.
"As a government, we have taken sustainable steps to cut the red tape, clearing the path for free market operations, and affirming our stance against corruption."
Energy is a key part of the Nigerian push to attract investments.
"Saudi Arabia, being a key player in the global energy market, holds the potential to channel significant investments into Nigeria, thereby stimulating economic growth, job creation and infrastructural development," the Nigerian Oil Ministry said in a statement carried by local news outlet Punch.
Apart from ending dependence on imported fuels, Nigeria looks to boost its oil and gas production and leave behind years of pipeline vandalism, oil theft, and a lack of investment in capacity.
By Tsvetana Paraskova for Oilprice.com
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