By Milcah Tanimu

The Oil and Gas sector is poised for a remarkable year in 2024, standing out as the top-performing index with a remarkable surge of 125% throughout the year. This outstanding performance is attributed to a series of policy reforms initiated by President Bola Tinubu’s administration since May.

One significant reform was the discontinuation of the costly fuel subsidy program, a move seen as pivotal for fiscal prudence. This decision not only reignited interest in energy stocks on the Nigerian Exchange (NGX) but also led to a substantial increase in liquidity across various sectors.

The oil and gas index, reflecting the performance of quoted firms on the NGX, soared by an impressive 125.5%, reaching 1,043.06 index points by the end of the year. Key constituents of the index include industry leaders such as Conoil, Eterna, Japaul Gold and Venture, MRS Oil Nigeria, Oando, Seplat Energy, Total Nigeria, and Capital Oil.

The positive momentum extended to other sectors, with the banking index witnessing substantial gains of 114.89%, concluding the year at 897.20 index points. Investment analysts express optimism about the Nigerian oil and gas sector in 2024, citing deregulation, liberalization, and anticipated major listings on the NGX.

Managing Director of Crane Securities Limited, Mr. Mike Eze, predicts increased activity in the sector, driven by deregulation and liberalization efforts. Eze anticipates the potential listing of the Nigerian National Petroleum Corporation (NNPC) on the NGX in the first quarter of 2024, citing the positive performance of the corporation and the upcoming launch of Dangote Refinery as significant market boosters.

Mr. Olatunde Amolegbe, Managing Director of Arthur Steven Asset Management Limited, acknowledges the potential benefits of oil and gas industry deregulation but emphasizes the need for careful monitoring of rising costs. He sees increased investor interest in the sector over the medium to long term.

Executive Vice Chairman of Hicap Securities Limited, Mr. David Adonri, highlights the significance of the commencement of domestic crude oil refining and the expected listing of Dangote Refinery. He believes these developments will make the petroleum sector attractive in 2024.

Analyst and Head of Research at FSL Securities Limited, Mr. Victor Chiazor, projects a surge in activity within the sector due to increased investments by Dangote Refinery and the positive impact of subsidy removal. Despite potential challenges, Kasimu Garba Kurfi, Managing Director/CEO of APT Securities and Funds Limited, shares an optimistic outlook for the sector in 2024, emphasizing key factors such as policy changes, the launch of Dangote Refinery, and stable or rising oil prices.

In conclusion, despite potential challenges, the Nigerian oil and gas sector presents a compelling opportunity for investors in 2024. The confluence of promising factors positions the sector as a significant driver of capital gains and share appreciation, requiring careful assessment of individual companies and risks for successful investment decisions.