Capital importation into oil, gas sector declines by 61% to $1.6m

By Our Reporter

A dismal decline was witnessed in terms of foreign capital injected into the Nigerian oil and gas industry in the first three quarters of 2023, as foreign portfolio investment in the sector between January and September 2023 plummeted by 61.1 per cent to $1.6 million.

This was recorded as poor showing according to data released by the National Bureau of Statistics (NBS), especially when compared to the $4.11 million recorded in the corresponding period in 2022.

According to NBS in the nine-month period of 2023, the oil and gas industry accounted for 0.057 per cent of total foreign portfolio investment in the country in 2023, compared with 0.096 per cent of the total the sector recorded in the same period in 2022.

Giving an analysis of the inflow into the oil and gas industry in 2023, the NBS stated that in the first quarter, foreign portfolio investment of $0.75 million was posted in the sector; while no inflow was reported in the second quarter of 2023, while $0.85 million inflow was recorded in the third quarter.

Significantly compared to the first quarter of 2022, foreign portfolio of $0.61 million was recorded in the oil and gas industry, while in the second and third quarter of 2022, inflow of $1.93 million and $1.57 million was recorded in the sector, respectively.

Overall, total portfolio investment inflow into the country in the nine-month period of 2023 was put at $2.817, comprising $1.133 billion, $1.03 billion and $654.55 million in the first, second and third quarter, respectively.

On the other hand, total portfolio investment into the economy in the nine-month period of 2022 was placed
at N4.268 billion, with inflow of $1.573 billion; $1.535 billion and $1.159 billion recorded in the first, second and third quarter of 2022, respectively.

According to NBS, in the third quarter of 2023, the total capital importation into Nigeria was $654.65 million, lower than the $1.159 billion posted in the third quarter of 2022, indicating a decline of 43.55 per cent.

It added that in comparison to the preceding quarter, capital importation fell by 36.45 per cent from $1.03 billion in Q2 2023.

The NBS said: “Other Investment ranked top accounting for 77.56 per cent ($507.77 million) of total capital importation in the third quarter of 2023, followed by Portfolio Investment with 13.31 per cent ($87.11 million) and Foreign Direct Investment (FDI) with 9.13 per cent ($59.77 million).

“The production/manufacturing sector recorded the highest inflow with $279.51 million, representing 42.70 per cent of total capital imported in the third quarter of 2023, followed by the financing sector, valued at $127.93 million (19.54 per cent), and Shares with $85.49 million (13.06 per cent).”

The NBS reported that capital Importation during the nine-month period originated largely from the Netherlands with $175.62 million, and recorded 26.83 per cent share of the total capital imported; followed by Singapore with $79.15 million (12.09 per cent of the total) and the United States with $67.04 million (10.24 per cent of the total).

Reacting to the development, Dr. Olufemi Omoyele, an oil and gas analyst attributed the decline to many factors, ” but foremost is the issue of insecurity which has scared away oil and gas investors. No foreign capital can come in the atmosphere of insecurity we have currently. Investors are not encouraged to come. You’re asking someone to come and put his or her money where it’s not safe”, he told EnergyDay.