Nigeria Selected as Host of $5B Africa Energy Bank, Kickstarting New Era of Oil & Gas Funding

African intergovernmental organization, the African Petroleum Producers’ Organization (APPO) has selected Abuja, Nigeria to host the headquarters of the newly established Africa Energy Bank (AEB). Jointly established by APPO and multilateral development finance institution the African Export-Import Bank (Afreximbank), the AEB aims to address the funding challenges faced by Africa’s oil and gas industry amid the global energy transition. As a supranational institution, it will provide funds for African energy projects, including emerging oil and gas projects across the continent.

A strong advocate for development of oil and gas in Africa, the African Energy Chamber (AEC) – serving as the voice of the African energy sector – congratulates Nigeria on this significant achievement, expressing its full support for the decision. This move will not only strengthen Nigeria’s role in the African energy landscape but will streamline funding for African projects, placing the continent on track for widespread industrialization and economic growth.

Nigeria’s selection followed a meticulous review process, with the decision made during the 45th Extraordinary Session of the APPO Ministerial Council – held virtually on July 4, 2024 and chaired by the Minister of Hydrocarbons of the Republic of the Congo Bruno Jean Richard Itoua. Following a review by the AEB Headquarters Ministerial Selection Committee, the committee evaluated criteria including socio-economic factors, safety, security and accessibility. The thorough selection process underscores the careful consideration given to Nigeria’s capabilities and strategic importance.

Committed to supporting the AEB, Nigeria’s Minister of State for Petroleum Resources (Oil) Heineken Lokpobiri assured the Council that Nigeria will provide the necessary facilities for the bank’s timely and effective establishment. Nigeria has been a long-standing producer and innovator of oil and gas projects on the continent. With an initial share capital of $5 billion, the bank will focus on financing energy projects across the continent, encompassing both fossil fuels and renewable energy sources. Following the bank’s announcement in November 2023, Afreximbank expressed that the bank will partner with over 700 banks in Africa to chart a profitable pathway for the African energy sector.

Nigeria has continued to advance its energy sector with notable projects and initiatives. The country is expanding its LNG capacity, with ongoing investments in the Nigeria LNG Train 7 project. Last month, integrated energy solutions provider Tetracore commissioned phase one of its Compressed Natural Gas facility in Nigeria, which is expected to have a capacity of 3.1 million standard cubic feet per day (MMscf/d), with plans to expand capacity to 6.2 MMscf/d in the future. This initiative is set to increase gas availability along the nation’s Western-Southerncorridor.

Additionally, state-owned Nigerian National Petroleum Corporation (NNPC) recently signed a Project Development Agreement with marine LNG infrastructure developer Golar LNG to deploy an FLNG facility offshore Niger Delta. The facility will produce LNG, LPG and condensate and is expected to have a capacity of 400-500 MMscf/d, demonstrating Nigeria’s ability to attract investments in the gas sector, which is a vital component for diversifying its energy mix and achieving energy security. Multinational energy corporation TotalEnergies and the NNPC also reached a $550 million FID for the development of the Ubeta gas field. Included in this development is the construction of a 5 MW solar plant and electrification of the drilling rig to mitigate the development’s carbon footprint. The decision for these companies to invest in Nigeria’s energy sector is a testament to its attractive socio-economic factors, its secure investment environment and its commitment to developing large-scale oil, gas and clean energy projects.

The establishment of the AEB in Nigeria is especially appealing given the recent financial support from international institutions. Last month, the World Bank approved a $2.25 billion package to assist Nigeria in improving its oil revenue management, ensuring fiscal sustainability, cultivating economic growth and enhancing public services. This financial endorsement enhances investor confidence and signals strong international support for Nigeria’s economic development.

“The selection of Nigeria to host the AEB is a great milestone for the bank. This also challenges Nigeria to be able to live up to its true meaning in getting its own home-based energy industry to work. Massive energy reserves available in the country will only support the bank and help drive it. There is also an amazing amount of talent in- and outside of the country, which will be instrumental in driving a world-class institution that will be operated in the same way that every western and Asian financial institution is operated. We at the chamber welcome this milestone and hope that the robust initiatives that are being taken to drive this bank will only serve to benefit the continent,” states NJ Ayuk Executive Chairman of the AEC.