Nigeria has retained its position as one of Africa’s dominant oil and gas investment destinations despite a sharp decline in upstream capital flowing into the continent, with the International Energy Agency revealing that the country and four other major producers still account for 70 per cent of Africa’s upstream investment and 80 per cent of its crude oil and gas production.
- +Nigeria retains Africa’s upstream investment lead despite capital decline
The disclosure comes as the agency warned that upstream investment across Africa has fallen dramatically over the past decade, reflecting declining competitiveness among mature producers even as emerging oil and gas nations continue to attract increasing capital.
The disclosure comes as the agency warned that upstream investment across Africa has fallen dramatically over the past decade, reflecting declining competitiveness among mature producers even as emerging oil and gas nations continue to attract increasing capital.
The findings were contained in the 2026 World Energy Investment Report, released by the International Energy Agency on Tuesday. According to the report, total upstream oil and gas investment across Africa declined from $68bn in 2016 to $37bn in 2025, representing a drop of about 46 per cent over the nine-year period.
The agency noted that despite the decline, investment remains heavily concentrated in five established producers—Nigeria, Algeria, Angola, Egypt and Libya.
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 oil industry, the report said they have collectively experienced a significant loss of 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.”
The report contrasted this trend with the growing attractiveness of emerging producers, where investors are committing billions of dollars to new projects despite relatively low production levels.
According to the IEA, investment flowing into Mozambique, Namibia, Senegal and Uganda increased from $1.5bn in 2016 to $5bn in 2025, more than tripling within the period.
Explaining the shift, the agency 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.”
Despite the overall decline in upstream investment, exploration activity remained relatively robust across the continent. The report disclosed that exploration capital expenditure reached almost $6.5bn in 2025 as companies intensified work 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 many African national oil companies are constrained by weak government finances, making it increasingly difficult for them 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 said the development underscores Africa’s continued dependence on foreign investors and multinational oil companies to finance large-scale upstream projects.
It stated that private and international oil companies remain the principal drivers of upstream investment across Africa, providing not only capital but also advanced technology and project execution expertise.
The report added that national oil companies account for about one-quarter of total upstream capital expenditure, a level that has remained broadly unchanged over the years.
Looking ahead, the IEA projected a rebound 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 agency attributed part of the expected recovery to new production projects involving major international oil 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.”
It added that Nigeria would remain one of the continent’s major investment destinations because of 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 agency further noted that Nigeria is also developing deepwater prospects in partnership with major international oil companies, a development expected to support future production growth and reinforce the country’s position as one of Africa’s largest upstream investment destinations.
Beyond oil and gas, the report showed that Africa is steadily attracting more investment into critical minerals essential for the global energy transition.
According to the IEA, Africa’s share of global investment in critical minerals increased from 14 per cent to 19 per cent over the past decade, while greenfield mining investment doubled from about $3.5bn in 2016 to just over $7bn in 2024.
The agency said more than 90 per cent of the increase was concentrated in copper projects, particularly in the Democratic Republic of Congo, Morocco and Zambia.
It also disclosed that lithium mining investment reached $28m in 2024, representing a 2.5-fold increase over 2023. However, the report warned that Africa continues to struggle to capture greater value from its mineral wealth because investment in domestic refining remains weak.
The IEA said although 13 African countries have imposed export restrictions on critical minerals to encourage local processing, downstream investment has risen only modestly to $2.5bn.
According to the agency, water shortages, inadequate electricity supply, poor infrastructure and shortages of skilled manpower remain major obstacles preventing African countries from expanding mineral processing and manufacturing industries.
Nigeria has intensified efforts to attract fresh upstream investment following years of declining capital inflows caused by oil theft, insecurity, regulatory uncertainty and delays in approving new projects.
