Assessing Nigeria’s Shifting Oil, Gas Landscape

On May 29, President Bola Tinubu will mark the halfway point into his tenure. Midway into his first term, Nigeria’s oil and gas sector, a long-standing cornerstone of the nation’s economy, stands at a critical juncture.  Since assuming office, the Tinubu administration has embarked on a series of policy reforms and strategic initiatives aimed at revitalising the industry, enhancing revenue generation, and attracting foreign investment.  But in the midst of some crowning moments, there still remain mountains of challenges. Emmanuel Addeh examines the strides and struggles in the last two years.

When President Bola Tinubu campaigned for the presidency, he pledged bold reforms to transform Nigeria’s oil and gas sector, from ending fuel subsidies and boosting local refining capacity to restructuring the Nigerian National Petroleum Company (NNPC) for transparency and efficiency. 

Tinubu outlined an ambitious agenda to overhaul the sector. He promised to phase out fuel subsidies, incentivise investment in domestic refining, unlock the full potential of gas as a transition fuel, and ensure the national oil company operated with profitability under the new Petroleum Industry Act (PIA).

Two years into his administration, the sector remains both a pillar of economic hope and a flashpoint for public scrutiny, remaining the lifeblood of the nation’s economy and sitting at the centre of both high expectations and persistent structural challenges. 

In the wake of those promises, his administration swiftly took major steps, most notably, the controversial but decisive removal of fuel subsidies in his first week in office. The move was hailed by economists as long overdue but met with public backlash due to the immediate rise in transportation and living costs. Meanwhile, efforts to boost local refining by the rehabilitation of state-owned refineries have made headlines, but questions remain.

Halfway through Tinubu’s tenure, questions persist: Has the administration delivered on its reformist outlook? Are investments increasing? Is the NNPC transforming into a truly national oil company? And perhaps most crucially, are Nigerians seeing the promised benefits of a restructured energy economy?

The answers to these questions may not be as straightforward as many would want, whether in terms of policy actions, implementation outcomes, stakeholder reactions, and the broader impact on national revenue, energy security, and the daily lives of Nigerians.

But what cannot be denied is that there has been a systematic and methodical push by the Tinubu administration to overhaul the sector, reduce bottlenecks to growth, put round pegs in round holes, depoliticise critical sector decisions and make the general oil business environment more attractive for both local and foreign investment.

Broadly speaking, Tinubu’s targets for the immediate overseers of the oil and gas sector were to increase crude oil production, accelerate completion of ongoing critical gas projects, increase local production of petroleum products, including petrol, diesel, naphtha  and others by ensuring availability of crude for domestic refining.

He also directed them to facilitate an increase in gas production, especially for power, industrial and domestic uses as well as initiate and implement citizens and stakeholder engagement sessions to communicate government activities which will serve as a feedback mechanism.

Raising Oil Output 

Nigeria has experienced a notable increase in crude oil production over the past year, largely due to enhanced security measures and strategic government initiatives aimed at curbing oil theft and boosting output. 

The Nigerian government has set an ambitious goal to increase crude oil production to circa 3 million bpd by December 2025.  Achieving this target is deemed crucial for meeting the nation’s budgetary requirements and enhancing economic stability.  

Indeed, there have been some improvements. In 2024, the daily average of crude oil production (without condensate) stood at 1.34 million bpd and 1.56 million bpd inclusive of condensate, with the highest monthly production of 1.69 million bpd in November, and the lowest of 1.23 million bpd in March 2024.

Nigeria therefore produced a total of 566.8 million barrels of crude oil and condensate in 2024 as follows: January: 1.64 mbpd; February: 1.53 mbpd; March: 1.44 mbpd; April: 1.45 mbpd; May: 1.47 mbpd; June: 1.50 mbpd; July: 1.53 mbpd; August: 1.57 mbpd; September: 1.54 mbpd; October: 1.54 mbpd; November: 1.69 mbpd and December: 1.67 mbpd.

Besides in 2025, Nigeria hit a milestone in January, recording a production of 1,73 mbpd; while in February, March and April, output data were: 1.67 mbpd; 1.60mbpd and 1.68 mbpd respectively.

Although a lot more needs to be done, this showed a relatively consistent increase in crude oil production over the year 2023 where the daily average of crude oil production (without condensate) was 1.23 million bpd and 1.47 million bpd inclusive of condensate. With these numbers, the country retained its position as the largest oil producer in Africa.

Growing Gas Production

In this area, the objective was to meet the rising demand for power, including industrial and domestic uses. The total gas production in 2024 stood at 2,508,327.51 (mmscf), comprising 1,440,742.48 mmscf for associated gas and 1,067,585.02 mmscf for non-associated gas.This was an increase from the 2,491,481 mmscf recorded in 2023.

In the same vein, The Midstream and Downstream Gas Infrastructure Fund Council (MDGIF) in line with Section 52 of PIA 2021, also approved seed investment in six projects to the tune of N122 billion that will accelerate Nigeria’s “Gas to Prosperity Agenda” across various parts of the country.

This was a critical first step and it is expected that more approvals and project monitoring will be carried out to ensure these projects are delivered on time and within budget.

Besides, there was the commissioning of the AHL Gas processing plant; ANOH Gas processing plant; and the 23.3kmx36 inch ANOH-OB3 gas pipeline projects in Delta and Imo states, projects expected to enhance Nigeria’s domestic gas processing capacity, ensuring that more natural gas can be processed and utilised for both domestic consumption and industrial use.

The construction of the Ajaokuta-Kaduna-Kano (AKK) Natural Gas Pipeline and Oben-Obrikom- Obiafu (OB3) Projects is also ongoing. The projects are primarily focused on boosting domestic gas supply, stimulating economic growth, and enhancing energy security.

Specifically, the Ajaokuta-Kaduna-Kano Natural Gas Pipeline and Oben-Obrikom-Obiafu (OB3) projects were at about 76.73 per cent and 98.47 per cent completion at the end 2024, according to information available to THISDAY.

The completion of the AKK and OB3 Gas pipeline projects is expected to help to ensure a more reliable and sustainable supply of natural gas across the country. This is crucial for both economic development and environmental sustainability.

Restarting PH, Warri Refineries

The Port Harcourt and Warri refineries have been central to Nigeria’s efforts to revitalise its domestic refining capacity, although both facilities have faced some challenges in their recent rehabilitation and operational phases. 

The Old Port Harcourt Refinery resumed operations in 2024 after undergoing extensive rehabilitation. The refinery has a combined capacity of 210,000 barrels per day (bpd), with the old plant processing 60,000 bpd and the new plant 150,000 bpd. It’s currently partially functional.

On the other hand, the Warri Refinery also resumed operations after over half a decade-long closure. The refinery has an operational capacity of 125,000 bpd. The NNPC has confirmed that the refinery currently works at 60 per cent capacity.

Capacity Development 

Working in partnership with the Petroleum Technology Development Fund (PTDF), the ministry of petroleum has prioritised the completion of the Centre for Skills Development and Training (CSDT) in Port Harcourt, a state-of-the-art facility dedicated to technical and vocational training for Nigeria’s oil and gas workforce.

CSDT offers hands-on training programmes in pipeline maintenance, offshore operations, safety, and environmental management, bridging the gap between academic knowledge and industry needs. The project is expected to be completed in December, 2025.

The centre is meant to enhance Nigeria’s local workforce capacity, reduce reliance on expatriates, and promote local content development, aligning with the Petroleum Industry Act’s (PIA) objectives.

Besides, the College of Petroleum and Energy Studies (CPESK) in Kaduna strengthens Nigeria’s local content aspirations by equipping students with practical, industry-relevant knowledge and skills.

The current administration has championed the completion of the college, a premier institution focused on training future industry leaders and technical experts.  CPESK offers specialised programmes in upstream, midstream, downstream, and renewable energy technologies. It is set to commence full operations by July 2025.

Petroleum Supply Stability

In this vein, the Tinubu administration seeks to prevent fuel scarcity, ensure nationwide product availability, and reduce smuggling. The scarcity of petrol now appears to be a thing of the past.

Through close monitoring of the downstream sector and proactive interventions, the government ensured stable petroleum product supply across Nigeria. The ministry, through coordination with NNPC, marketers, and regulatory bodies, has ensured seamless refining, distribution, and pricing stability.

This was further strengthened by the Crude-for-Naira policy with Dangote Refinery which mandates the transaction of crude oil and refined petroleum products in Naira. The objective is to strengthen Nigeria’s economic sovereignty, enhancing local refining capacity, and stabilising the foreign exchange market by reducing the demand for dollars in domestic petroleum transactions.

Strengthening Community Relations

By addressing grievances and ensuring host communities benefit directly from oil operations, the ministry of petroleum has fostered peace and operational stability, prioritising building trust between oil companies and host communities through consistent engagement, conflict resolution mechanisms, and community development projects.

Most communities now have their Host Community funds set up and they are assessing it right now. This improved relationship reduced pipeline vandalism and production disruptions, ensuring smooth operations.

This community-centered approach strengthens Nigeria’s social license for oil operations, aligning with the PIA’s emphasis on sustainable community development.

Policy Reforms

In terms of policy reforms, the government says its agenda is to accelerate full implementation of the PIA and implement additional favourable policies to attract investment in deepwater assets.

There has been some progress in that connection, with the attraction of Final Investment Decisions (FID) to the tune of $ 5 billion by Shell at Bonga North Deepwaters. The ministry played a pivotal role in securing the $5 billion FID for the project, a significant boost to Nigeria’s offshore sector.

By ensuring that the president’s directives on regulatory policies are carried out, and addressing key stakeholder concerns, it created an enabling environment that attracted Shell and partners’ commitment. 

This landmark investment will enhance offshore production, generate substantial revenue, create jobs, and promote local content participation, reinforcing Nigeria’s position in global deep-water oil production.

Besides, the administration has ensured that delayed divestment deals are completed, giving way for local players to compete favourably with the International Oil Companies (IOCs).

They include: Oando’s acquisition of the Nigerian Agip Oil Company (NAOC) from Eni; Chappal Energies, through its project vehicle Odinmin, acquiring Equinor Nigeria’s assets as well as Seplat Energy acquiring Mobil Producing Nigeria Unlimited (MPNU), a subsidiary of ExxonMobil.

FX Flow/ Project Funding 

The federal government through the ministry of petroleum has bridged the gap between IOCs and the Central Bank of Nigeria (CBN), fostering collaboration on foreign exchange access, project funding, and sector financing.

This engagement ensured smoother capital inflows, improved forex availability for operations, and enhanced IOC confidence in Nigeria’s fiscal and monetary policies.

In addition, Nigeria has successfully bid to host the Africa Energy Bank (AEB) a continental financial institution dedicated to funding Africa’s energy projects, which is in its final stage before takeoff.