The week ahead – Santa pause

20th December 2024

Shell Nigeria Exploration and Production Company Limited (SNEPCo) has made a final investment decision on the Bonga North deep-water project, a subsea tie-back to the Bonga FPSO facility. The project involves 16 wells, subsea hardware, and FPSO modifications, with the first oil expected by the decade’s end and peak production of 110,000 barrels daily. Seplat Energy Plc has acquired Mobil Producing Nigeria Unlimited (MPNU) from ExxonMobil, doubling its production and reserves to 409 million barrels of proven reserves. Nigeria’s oil production rebounded to 1.69 million barrels per day in November, with crude production averaging 1.48 million barrels per day.

These transactions mark a turning point for Nigeria’s oil and gas sector, showcasing a well-orchestrated approach to stakeholder engagement for which the government deserves commendation. The Bonga final investment decision (FID) stands out as particularly significant, as it represents the first major deepwater investment in over a decade. This decision signals a cautious resurgence of confidence among international oil companies (IOCs) in Nigeria’s potential, especially in its deepwater segment—a critical area for its future production capacity. However, the interconnected nature of Nigeria’s oil deals cannot be overlooked. The approval of Shell’s divestment of its onshore assets to Renaissance Africa Energy appears closely linked to the broader strategic goals of reinvigorating the sector. Similarly, the Ubeta oil field deal, poised to produce 350 million standard cubic feet (scf) of gas per day, adds another layer to this intricate web of transactions. These deals are not occurring in isolation but as part of a broader strategy to reinvigorate Nigeria’s energy landscape. Despite holding the 10th largest crude oil reserves globally at the close of 2023, Nigeria’s oil sector remains underwhelming compared to its peers nearly 70 years after the discovery of commercial crude oil. Chronic underinvestment and regulatory uncertainty have hampered growth. However, implementing the Petroleum Industry Act (PIA) alongside President Tinubu’s executive orders appears to have initiated a gradual turnaround. These measures have bolstered investor confidence, creating opportunities for domestic oil companies like Seplat to step into roles traditionally dominated by IOCs. Seplat’s recent acquisition of Mobil Producing Nigeria Unlimited is a prime example of this shift. With equity in 11 blocks (onshore and shallow water), 48 producing fields, five gas processing facilities, and three export terminals, Seplat has emerged as a key player in the sector’s new era. Such developments highlight the broader trend of local firms acquiring legacy assets from the “big boys,” a trend that reflects both the challenges and opportunities within Nigeria’s oil and gas industry. The relative stability in the Niger Delta and the Tinubu administration’s “ready-for-business” posture has created a more conducive environment for investment. This environment bodes well for attracting further deals and solidifies the position of key figures like Mele Kyari at the helm of the NNPC. As Nigeria grapples with the challenge of boosting oil production after decades of neglect and underinvestment, these developments serve as early dividends of the long-delayed PIA. A crucial lesson emerges from this phase of Nigeria’s energy transition: investors are drawn to environments where regulatory certainty and transparency allow for proper risk assessment. While these deals signify progress, the inherent lead times associated with bringing new sites online mean that tangible production increases are unlikely to materialise during Mr Tinubu’s first term. Instead, immediate gains will depend on addressing persistent issues such as oil theft, which recent reports suggest has been somewhat mitigated. The next 24 months will likely witness more announcements as IOCs consolidate their positions in the deepwater segment—a space increasingly seen as the future of Nigeria’s oil production. These transactions will not only shape the trajectory of Nigeria’s energy sector but also serve as a litmus test for the effectiveness of the Tinubu administration’s policies in transforming the oil and gas industry into a globally competitive player.

Kaduna Governor Uba Sani announced that the 36 states have submitted reports on creating state police to the National Economic Council (NEC). Speaking after the NEC meeting in Abuja, chaired by Vice-President Kashim Shettima, Sani noted widespread support for state police, noting that virtually every state has security challenges. He emphasised state police as a viable solution to Nigeria’s insecurity issues. However, the NEC deferred further discussions on the matter until its January 2025 meeting, signalling the need for more deliberation on the crucial security reform.

State policing is a recurring topic in Nigeria’s political discourse, often resurfacing with vigour, particularly during election cycles or in response to escalating insecurity. It was notably one of the key security proposals championed by the All Progressives Congress (APC) in its 2015 election manifesto, raising hopes for a fundamental restructuring of Nigeria’s security framework. However, there is often a wide chasm between campaign promises and the realities of governance at the federal level, and the issue of state policing is no exception. The closest the APC came to seriously addressing this issue was through the 2018 El Rufai-led panel on restructuring, which included recommendations for state policing. Yet, despite the fanfare surrounding the initiative, it yielded little actionable outcomes. Meanwhile, the country’s security challenges have only worsened, with rising insurgency, banditry, and kidnapping overwhelming existing security structures. This has necessitated greater military involvement in internal security operations, which contradicts the military’s long-term strategic goal of withdrawing from such engagements. The military has repeatedly urged the police to assume greater responsibility, particularly in consolidating control over territories reclaimed from terrorists. However, the federal police force remains overstretched and ill-equipped to effectively take on these expanded roles. Between 2018 and 2021, discussions around state policing reached an unprecedented fever pitch, fueled by growing frustrations with the centralised security apparatus. Yet, the Buhari administration, backed by the Northern political establishment, remained resolutely opposed to the idea. This opposition culminated in its resistance to the creation of Operation Amotekun, a regional policing initiative launched by Southwest states to address insecurity in the region. Interestingly, toward the tail end of Buhari’s tenure, Northern governors, who had historically championed centralisation, began establishing parallel security structures in the form of vigilante groups. These outfits, in essence, function as state-level police forces, reflecting a pragmatic shift in their approach to tackling insecurity. This apparent contradiction highlights a critical lesson about the nature of Nigerian federalism. While the Constitution grants states the authority to establish security outfits, it reserves the federal government’s core responsibility for national security. This constitutional arrangement creates a dynamic in which the federal government can undermine state-led initiatives through various means, including denying them access to sophisticated weaponry. Furthermore, there is a notable pattern in Northern political behaviour: when out of power at the federal level, they advocate for devolution of powers, but when in control of Aso Rock, they staunchly defend centralisation. This dynamic is playing out once again under President Bola Tinubu’s administration. Tinubu, who faces regional unpopularity and significant challenges to his political legitimacy, must navigate the complex interplay of regional interests, particularly as Northern governors frame their push for state-level security structures as a national imperative. Yet, the crux of the issue lies not merely in the creation of state police but in the mechanisms for their management and oversight. As we noted in a previous editorial, any attempt to replicate the flawed centralised model of policing at the state level would only entrench existing inefficiencies and abuses. Without robust checks and balances, state governors could wield disproportionate power over these forces, transforming them into instruments of political oppression rather than tools for public safety. This scenario would exacerbate Nigeria’s governance challenges, creating a facade of reform while perpetuating the systemic failures of the current security architecture. Ultimately, while the debate over state policing reflects the growing recognition of the inadequacies of Nigeria’s centralised security framework, its implementation requires careful planning, inclusive dialogue, and a commitment to genuine reform. Anything short of this risks reinforcing the status quo and deepening the country’s security crisis.

Burkina Faso, Mali and Niger will have a six-month grace period following their scheduled exit from ECOWAS on 29 January 2025, leaders of the bloc agreed during a summit. While the official withdrawal date remains unchanged, the transition period extends their effective departure to 29 July, allowing mediators to work on re-engaging the countries with ECOWAS. Despite this extension, the three nations reaffirmed their decision to leave as final and declared their territories visa-free for ECOWAS citizens post-exit. The withdrawal marks a significant shift away from decades of regional integration, with ongoing efforts to find common ground.

The determination of the three countries to exit ECOWAS is deeply rooted in structural challenges. One stark example of ECOWAS’s limitations lies in Nigeria’s use of electricity as a geopolitical tool against Niger. That episode highlighted how economic interdependence, when weaponised, can exacerbate tensions rather than foster unity. At its core, ECOWAS has struggled to fulfill its original mandate: transforming the region into a single, integrated economic entity. This failure stems from several factors, including ideological resistance to ceding political sovereignty and a lack of progress in moving from raw material exports to value-added industrial economies. The resulting economic structures, characterised by competition rather than complementarity, have hindered meaningful intra-regional trade. ECOWAS’ decision to extend the grace period for Burkina Faso, Mali and Niger after their scheduled exit underscores the bloc’s delicate balancing act: maintaining regional cohesion while addressing the grievances of its member states. The three Sahelian nations have made their stance unequivocally clear, declaring their withdrawal as final and citing dissatisfaction with how ECOWAS handled their political transitions, particularly its imposition of sanctions and suspensions following military coups. As we have noted in previous editorials, this evolving standoff has left ECOWAS under Nigeria’s President Tinubu’s leadership on shaky ground. A series of policy reversals since late 2023 highlights the bloc’s struggle to navigate the crisis. The current fracture traces back to ECOWAS’s controversial and ultimately abandoned plan to use military force to restore democratic governance in Niger following its July 2023 coup. While the region has achieved milestones such as the free movement of people, its attempts at integrating goods and services markets have been largely unsuccessful. This failure to achieve robust economic integration has left ECOWAS reliant on reactive and inconsistent political mechanisms to address member-state issues. Research suggests that exiting political unions is far easier than departing from deeply integrated economic frameworks—a reality that the Sahelian states have likely factored into their calculations. Nonetheless, these nations value the socio-economic benefits of regional cooperation, as evidenced by their decision to maintain visa-free access for ECOWAS citizens post-withdrawal. The departure of the trio presents a paradox. While their exit is a setback for ECOWAS, it could also be an opportunity for the bloc to refocus on its foundational goal of economic integration. Though achieving initiatives like the Eco currency or a seamless economic union remains a distant prospect, renewed efforts to improve the business environment and deepen economic ties among remaining members could reinvigorate the bloc. Creating a more attractive and functional ECOWAS may eventually persuade the departing countries to reconsider their positions. The six-month extension of the transition period to 29 July 2025 reflects ECOWAS’s determination to uphold the principles of regional integration. This window offers a chance for dialogue and mediation to prevent further fragmentation and address the geopolitical and economic fallout of losing three member states. Niger, Mali and Burkina Faso’s pivot toward alternative alliances—particularly with Russia and other non-Western powers—signals a shifting geopolitical landscape that challenges ECOWAS’s influence in West Africa. Their exit raises critical concerns about a fragile region’s security, trade disruptions, and migration flows. For ECOWAS, this moment represents a test of adaptability and relevance. The bloc must reconcile its commitment to democratic norms with the pragmatic realities of political transitions in member states. To regain credibility and foster unity, ECOWAS must engage constructively with the departing countries, address their core grievances, and highlight the tangible benefits of cooperation. Adopting more flexible membership models, prioritising shared challenges like security and economic integration, and promoting goodwill measures—such as preserving visa-free travel—could lay the groundwork for renewed collaboration. Ultimately, ECOWAS’s response to this crisis will define its role in shaping the future of regional stability and prosperity.

Somalia and Ethiopia have agreed to resolve a dispute over Ethiopia’s plan to build a port in Somaliland, aiming for commercial arrangements to secure Ethiopia’s sea access. Talks, mediated by Turkish President Tayyip Erdogan, will begin by February 2025 and conclude within four months. Meanwhile, clashes erupted between Somalia’s federal forces and Jubaland’s regional forces in Ras Kamboni. Jubaland accused federal troops of drone attacks, while Somalia’s Defence Minister claimed Jubaland initiated the conflict. Jubaland forces reportedly captured Ras Kamboni, with federal troops retreating to the Kenyan border. At least 10 people were killed in the violence.

This development adds another milestone to Turkiye’s President Recep Tayyip Erdogan’s and by extension, Turkiye’s rising profile as a regional power broker even beyond the Middle East and the Mediterranean basin. The country has been increasingly making its mark in several conflicts that span Africa, the Middle East and the Caucasus through its neo-Ottoman foreign policy. In a way, this development signifies a breakthrough in the standoff between Ethiopia and Somalia since the January deal that saw Addis Ababa promise international recognition to Somaliland in the long term and increased stakes in the state-owned Ethiopian Airlines in the short term in exchange for the latter’s grant of a port in Berbera by which Ethiopia can conduct international trade independent of the shocks that come with using Djibouti’s port. The deal angered Mogadishu as a slap on its sovereignty which it demonstrated by allying with a coterie of Ethiopia’s rivals, including Turkiye which has successfully managed to present itself as an impartial arbiter while offering a range of security assistance to Somalia. According to Erdogan in the Ankara Declaration that aims to reduce tensions between Mogadishu and Addis Ababa, the deal aims “to leave behind differences of opinion and contentious issues.” The agreement would grant Ethiopia “reliable, safe and sustainable” sea access under Somali sovereignty, implicitly signalling that Addis Ababa will rescind its recognition of the de facto state of Somaliland. This means that Ethiopia must now commit to directly negotiating with Somalia instead of Somaliland, which Somalia regards as its province. Apart from how this breakthrough by Ankara undercuts Egyptian influence in the region, one other thing that stands out is how willing Ethiopia is to commit to the declaration. We have noted in a previous editorial that the incoming Trump administration in the US may change the geopolitical calculus in the politics of the Horn of Africa following growing calls by Trump’s foreign policy associates to recognise Somaliland as a bulwark and counter to Chinese influence in the region. Suppose the administration, due to take office in late January, shows any early sign of inching in that direction in light of its policy of maximum pressure on China. In that case, chances are that Ethiopia may hedge its bets and stonewall the process for as long as it can. All these developments indicate that Mogadishu’s failure to hold all of its territories de-jure is coming home to roost. Meanwhile, the situation in Jubaland is a key example of the deeply fractured nature of Somalia’s federalism. The escalation of violence followed Jubaland’s unilateral election, granting Ahmed Mohamed Islam Madobe a third consecutive term without Mogadishu’s approval. This defiance led to Mogadishu issuing an arrest warrant for Madobe, prompting a reciprocal warrant from Jubaland targeting President Hassan Sheikh Mohamud. The conflict unfolds in a strategically vital area. Jubaland, one of Somalia’s five semi-autonomous regions, borders Kenya and Ethiopia. It serves as Somalia’s primary agricultural region, its coastline marks a disputed maritime boundary with Kenya, potentially rich in oil and gas reserves, and Kismayo is a crucial port city. Kenya’s decision to send back more than 600 Somalian troops who surrendered and fled to the Kenyan part of the border could have led to a regional escalation, but this has been temporarily forestalled by the pulling back of more federal troops by the government in Mogadishu over what it says would be a focus on the threat of Islamist insurgency. With relations between the central government and Jubaland frozen and the former all but accepting defeat, the Somalian state’s geopolitical calculus and survival remain in doubt.