The agency disclosed that Nigeria, alongside Algeria, Angola, Egypt and Libya, continues to dominate Africa’s upstream petroleum sector, accounting for 70 per cent of upstream investment and 80 per cent of crude oil and gas production.

The findings are contained in the 2026 World Energy Investment Report, released by the International Energy Agency on Tuesday. The report revealed that upstream oil and gas investment across Africa dropped from $68bn in 2016 to $37bn in 2025, representing an overall decline of about 46 per cent over nine years.

Despite the continent-wide contraction, investment remains concentrated in the five long-established producing nations.

The IEA stated, “In the past decade, the continent’s upstream sector has shown diverging trends between established producers and emerging suppliers. Investment in the region remains highly concentrated, with five countries – Algeria, Angola, Egypt, Nigeria and Libya – accounting for 70 per cent of investment and 80% of production.”

While these countries continue to dominate Africa’s petroleum industry, the report noted that they have collectively experienced a significant reduction in investment over the past decade.

According to the agency, “However, total investment across these producers has halved from $50bn in 2016 to $25bn in 2025, despite an increase in Libya, reflecting shifts in investment competitiveness.”

Emerging producers attract fresh capital

The report highlighted a contrasting trend among Africa’s emerging oil and gas producers, which have increasingly attracted investor interest despite lower production volumes.

Investment flowing into Mozambique, Namibia, Senegal and Uganda rose from $1.5bn in 2016 to $5bn in 2025, more than tripling during the period.

Explaining the development, the IEA said, “This reflects fewer opportunities to invest in mature assets and the development of new capital-intensive projects (particularly deepwater and LNG terminals), resulting in higher investment requirements relative to current output.”

Exploration spending remains resilient

Although overall upstream investment has declined, exploration activity remained relatively strong across the continent.

The report showed that exploration capital expenditure reached almost $6.5bn in 2025, reflecting increased activity around recently discovered hydrocarbon basins.

The IEA said, “Exploration capex in Africa reached almost USD 6.5bn in 2025 reflecting ongoing work across recent discoveries. Given that the average global rate of commercial success is 27 per cent, exploration is inherently risky, with national oil companies taking on a greater role.”

However, the agency warned that weak public finances continue to limit the ability of many African national oil companies (NOCs) to finance expensive exploration and production projects.

According to the report, “However, constrained government budgets in several producer countries can limit the ability of NOCs to fund upstream investment, raising reliance on partnerships and alternative financing arrangements, as seen in Mozambique and Senegal.”

The IEA noted that Africa’s upstream sector remains heavily dependent on foreign investors and multinational oil companies, which continue to provide funding, advanced technology and project execution expertise.

It added that national oil companies account for approximately one-quarter of total upstream capital expenditure, a share that has remained broadly stable over the years.

Investment expected to rebound in 2026

Looking ahead, the agency projected an improvement in upstream investment across sub-Saharan Africa after last year’s slowdown.

According to the report, upstream investment in the region is expected to increase by 12 per cent to approximately $24bn in 2026, following an 18 per cent year-on-year decline recorded in 2025.

The IEA linked part of the anticipated recovery to new production developments involving international energy companies.

The report stated, “BP’s investment in 2026 is centred on increasing production in Angola and Namibia’s Orange Basin through the Azule Energy joint venture.”

Nigeria is also expected to remain a major destination for investment due to ongoing gas and deepwater developments.

According to the IEA, “LNG supply development continues in both Nigeria and Mozambique by a variety of majors and local companies.”

The report further noted that Nigeria is advancing deepwater projects in partnership with major international oil companies, a development expected to support future production growth and reinforce the country’s standing as one of Africa’s leading upstream investment destinations.

Critical minerals gain momentum

Beyond hydrocarbons, the report showed that Africa is attracting increasing investment in critical minerals needed for the global energy transition.

According to the IEA, the continent’s share of global investment in critical minerals rose from 14 per cent to 19 per cent over the past decade, while greenfield mining investment doubled from approximately $3.5bn in 2016 to just over $7bn in 2024.

More than 90 per cent of the increase was concentrated in copper projects, particularly in the Democratic Republic of Congo, Morocco and Zambia.

The report also disclosed that investment in lithium mining reached $28m in 2024, representing a 2.5-fold increase over 2023.

Despite the gains, the agency cautioned that Africa continues to struggle to maximise value from its mineral resources because investment in domestic refining remains limited.

Although 13 African countries have introduced export restrictions on critical minerals to promote local processing, downstream investment has increased only modestly to $2.5bn.

According to the IEA, persistent challenges including water shortages, unreliable electricity supply, inadequate infrastructure and shortages of skilled manpower continue to hinder expansion of mineral processing and manufacturing across the continent.

Nigeria pursuing renewed investor confidence

Nigeria has intensified efforts to attract new upstream investment after years of declining capital inflows driven by oil theft, insecurity, regulatory uncertainty and delays in project approvals.

Since the enactment of the Petroleum Industry Act (PIA) in 2021, the Federal Government has introduced fiscal incentives, accelerated licensing rounds and approved tax reforms designed to improve investor confidence.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has consistently stated its objective of increasing crude oil production to 2 million barrels per day by 2027 and 3 million barrels per day by 2030, while expanding natural gas production through new deepwater developments, floating LNG projects and non-associated gas fields.

The latest IEA report indicates that although Nigeria remains one of Africa’s foremost destinations for upstream investment, competition for global capital is increasing as emerging producers such as Namibia, Mozambique, Senegal and Uganda continue to secure significant international investment.

Source: Punch