Nigeria’s oil and gas sector has recorded modest achievements against long-standing challenges. The Federal Government, seeking to build on this momentum, has rolled out strong policies, laying the foundations for a more resilient and investor-friendly future, DAMILOLA AINA writes.
Two years into the administration of President Bola Ahmed Tinubu, Nigeria’s oil and gas sector continues to navigate longstanding challenge.
From modest gains in crude oil production to policy efforts aimed at revitalising local refining and attracting investment, the sector has seen a mix of progress and persisting hurdles.
At the heart of the government’s reforms is the Renewed Hope agenda, a blueprint that seeks to boost production, deepen local participation, and enhance transparency across the petroleum value chain.
Production recovery is underway
Upon assuming office in May 2023, one of President Tinubu’s first major policy decisions was the removal of the petrol subsidy—an action aimed at deregulating the downstream sector and freeing up public finances for broader development.
The move, although met with immediate economic impacts, was hailed by global financial institutions as a bold step toward fiscal sustainability.
Tinubu inherited a sector in distress. Crude oil production, Nigeria’s economic lifeblood, was struggling to meet OPEC quotas. Oil theft, pipeline vandalism, and chronic underinvestment had driven production to historic lows.
The President’s campaign manifesto, the ‘Renewed Hope Action Plan’, promised a turnaround: increasing crude oil production to 2.6 million barrels per day by 2027 and four mbpd by 2030.
Since then, the administration has taken steps to stabilise oil production. According to the Nigerian Upstream Petroleum Regulatory Commission, crude oil and condensate output averaged 1.56 million barrels per day in 2024—an improvement from the 2023 average of 1.47 million bpd but below the 2024 budget benchmark of 1.78 million bpd.
This trajectory suggests a slow but steady recovery. Although the highest monthly production in 2024, 1.69 mbpd, was still below pre-pandemic levels, underscoring how far Nigeria has fallen.
In total, Nigeria managed to produce 566.8 million barrels of crude oil and condensate in 2024. In the first four months of 2025, Nigeria produced approximately 200.87 million barrels of crude oil and condensates, compared to the projected 247.2 million barrels based on the budget target.
This shortfall of about 46.4 million barrels has resulted in an estimated revenue loss of $3 bn, assuming an average Brent crude price of $65 per barrel.
For a country with the capacity to do much more, this marginal increase cannot be celebrated as a breakthrough. It is, at best, a tepid recovery in the face of a national emergency.
But all hope is not lost. The Group Chief Executive Officer of Nigerian National Petroleum Company Limited, Bashir Ojulari, has told President Bola Tinubu that the company is targeting 1.9 million barrels per day of crude oil production by the end of the year.
The target was contained in a statement by the Special Adviser to the President (Information & Strategy), Bayo Onanuga, on May 22, 2025, during the inauguration of the NNPC Limited Board at the State House on Thursday in Abuja.
Ojulari, who resumed his appointment on April 2, 2025, after the sacking of former GCEO Mele Kyari, a decision described as a positive one for the industry, was quoted as saying the NNPCL team had already met with industry stakeholders to review operations and business relationships and that crude oil production is on course to hit 1.9 million barrels per day.
He stressed, “Production had risen to 1.7 million barrels in two months from 1.5 million barrels, with the target of reaching 1.9 million barrels by year-end.”
A mid-term report document (MAY 2023 – MAY 2025) that details industry achievement shows that while the Ministry of Petroleum Resources has made some progress, most of the key targets set under Tinubu’s Renewed Hope campaign manifesto have not been fully achieved.
The report outlines goals such as raising crude oil production to three million barrels per day, completing major gas infrastructure projects, increasing gas supply for power, industry, and homes, and boosting the local production of petroleum products like petrol, diesel, kerosene, and aviation fuel.
While there have been steps in the right direction, the ministry has yet to deliver on many of its core promises.
Although efforts have been made, including supporting domestic refining and holding quarterly stakeholder meetings to improve communication, progress has been slow.
The rehabilitation of key refineries in Port Harcourt, Warri, and Kaduna is still shrouded in secrecy, and local production of petroleum products continues to fall short of demand.
On Wednesday, May 28, the national oil firm officially announced the shutdown of the Port Harcourt Refining Company. It said the facility will be shut down for a month for maintenance activities, further questioning the operational integrity of the state-owned firm, particularly regarding transparency, efficiency, and overall management of Nigeria’s refineries under the former Muhammadu Buhari’s purview.
The refinery rehabilitation ruse
Perhaps the biggest disappointment is the continued dysfunction of Nigeria’s refineries. The Port Harcourt Refinery, long promised as the cornerstone of Nigeria’s refining independence, was supposed to be fully operational by the end of 2023.
By December, the Nigerian National Petroleum Company Limited announced the mechanical completion and flare start-up of the 60,000 barrels per day hydro-skimming refinery. But as of April 2025, no petrol from Port Harcourt had hit the Nigerian market.
In fact, not one of Nigeria’s three state-owned refineries is refining petrol at a commercial scale. The so-called “mechanical completion” is now industry shorthand for delays, half-truths, and spin.
The situation is even more perplexing considering the massive funds totalling $2.5bn funnelled into refinery rehabilitation. The Federal Executive Council allocated over $1.5 bn to the Port Harcourt facility alone. With nothing tangible to show for it, critics say this is yet another instance of public funds going up in smoke.
The $897m Warri refinery has also remained shut since January 25, 2025, due to safety issues in its Crude Distillation Unit Main Heater, while the “quick-fix” rehabilitation project at the Kaduna Refinery has suffered repeated delays, further stalling the government’s plan to revive local refining capacity.
The only shield Nigeria has had against soaring pump prices and the unchecked activities of profit-driven petroleum marketers and depot owners has been the Dangote Petroleum Refinery.
While many marketers prioritised profit margins, often hoarding products or manipulating supply to inflate prices, the entry of Dangote’s refinery helped to stabilise the market to some extent.
By offering refined products locally and reducing reliance on costly imports, the refinery provided a measure of relief to Nigerian consumers facing relentless fuel price hikes.
Renowned energy economist Prof. Wumi Iledare attributed the persistent fuel supply and pricing challenges in Nigeria to deep-rooted structural issues within the sector.
“In the downstream petroleum sector, while there has been progress in boosting local refining capacity, it is far from being fully realised,” he explained in an interview with The KUKURUKU. “
Although the Dangote Refinery has commenced operations, Nigeria still relies, albeit less, on imported refined petroleum products.
The delays in rehabilitating state-owned refineries, regulatory inconsistencies affecting modular refinery development, and the continued dependence on fuel imports are major barriers to achieving affordable and reliable transportation fuel for Nigerians.”
Petroleum supply stability: A shaky win
The Ministry of Petroleum Resources made headway in stabilising domestic petroleum supply.
Through close monitoring of the downstream sector and proactive coordination with NNPC Ltd., marketers, and regulatory bodies, Nigeria largely avoided the prolonged fuel scarcity episodes of previous years.
However, the relief proved to be shallow. Despite claims of seamless importation and pricing stability, Nigerians still endured inconsistent pricing and periodic squabbles between players.
The deregulation of the petroleum sector, a hallmark of Tinubu’s economic reform drive, didn’t deliver the anticipated market efficiency.
Instead, it left consumers exposed to global price shocks, with low local refining capacity to cushion the blow.
Another pillar of Tinubu’s oil and gas reform promise is increasing indigenous participation and ensuring host communities benefit directly from oil operations.
The Petroleum Industry Act 2021 has already laid the legal groundwork for this through the creation of Host Community Development Trusts.
However, there has been some progress. Most communities now have their trust funds set up and are assessing them. The ministry claims this has improved relationships, reduced pipeline vandalism, and enhanced operational stability. These are not minor gains.
Yet, peace without prosperity is fragile. The oil-producing regions, from the swamps of Bayelsa to the creeks of Rivers State, remain some of the poorest in the country.
Also, the government has demonstrated a strong commitment to increasing the indigenous share of Nigeria’s oil and gas industry, in line with its broader local content development goals.
This commitment is becoming more evident as more Nigerian companies step in to acquire assets divested by international oil companies.
These transitions mark a significant shift in industry dynamics, with indigenous firms such as Seplat Energy, Heirs Energies, and First E&P emerging as key players in upstream operations.
The policy push toward empowering local operators aims not only to deepen national participation to 56 per cent but also to retain more value within the country, create jobs, and build local capacity across the petroleum value chain.
Through initiatives driven by the Nigerian Content Development and Monitoring Board, the administration is working to ensure that Nigerians are not just participants but leaders in exploration, production, refining, and oilfield services, ultimately fostering a more resilient and inclusive oil and gas sector.
While oil dominated the headlines during the period under review, gas remained a key pillar of Nigeria’s energy future. President Tinubu’s manifesto outlined ambitious goals for gas commercialisation, but implementation has lagged.
The 2023 manifesto promised to harness domestic gas potential and increase investment in infrastructure and technology. In reality, the pace of gas commercialisation has been glacial.
Key projects like the Ajaokuta-Kaduna-Kano pipeline ran behind schedule. There was little headway in building domestic gas markets or transitioning from diesel-powered generators to gas-powered plants. Even the widely touted Decade of Gas initiative lost momentum.
The global energy transition presented Nigeria with a narrow window to monetise its gas. Unfortunately, Tinubu’s government squandered that opportunity.
The NNPC conundrum
The unbundling of the NNPC into a limited liability company was one of the major structural reforms of former President Muhammadu Buhari’s administration.
Tinubu inherited this new entity with the expectation of efficiency, transparency, and profitability, but this did not materialise in two years.
A recent change of leadership brought a breath of fresh air into the organisation, raising hopes for reform.
However, the real challenge lies in proving to the Nigerian public that the company is no longer opaque, excessively bureaucratic, or largely unaccountable.
The newly appointed NNPCL non-executive chairman, Musa Kida, said the new team was focused on transitioning from a corporation or an agency of government to a limited liability company and asked Nigerians to give the board time to fix the oil sector.
Kida, briefing State House journalists after their inauguration by President Bola Tinubu at the Presidential Villa recently, assured that the board was ready to reform the oil sector but asked for patience and understanding, describing the assignment as “a huge task”.
He also assured that the oil industry will now be run as a purely limited liability company, adding that “When the Petroleum Industry Act was signed into law, the nation moved the NNPCL to limited liability, and our role is to put in the best of practices.
We will do all that is possible to deliver on the mandate the President gave us on production, refineries, attracting foreign direct investment and corporate governance.
“Our task is huge. But we are deeply honoured to be part of the very select few called upon by the president to reform the oil sector. One thing we can assure you is that we will always tell Nigerians the truth, irrespective of how bitter it will be.”
Weighing in on the Tinubu administration’s performance in the oil and gas sector, energy expert and CEO of Dairy Hills, Kelvin Emmanuel, acknowledged that while some progress has been made, it has been slow and uneven.
There have been important steps forward,” he noted. “The government has unified the exchange rate and shifted to a market-based foreign exchange regime, although the quality of Nigeria’s net external reserves remains weak due to their reliance on volatile foreign portfolio inflows.
It has also removed under-recovery and aligned with Section 205 of the PIA by adopting a market-driven pricing system for petrol.
Additionally, the recapitalisation of the banking sector is a significant move, given that many banks’ balance sheets were strained by currency devaluation, limiting their ability to attract institutional inflows.”
However, Emmanuel emphasised that substantial work remains to be done. According to him, “the government must develop a clear commercial framework for offshore and non-associated gas production; implement a robust hydrocarbon accounting system in the upstream sector to curb technical losses; transition from Joint Venture-led procurement to best practice-based systems, ideally through an Incorporated Joint Venture model under Section 65 of the PIA; reform the commercial model for pipeline infrastructure and expand evacuation infrastructure for refined products nationwide; move NNPC Limited from government control to a fully market-driven entity, which can only be achieved through unbundling and an eventual IPO; focus on supply-side economic reforms to ease the burden of tight monetary policies that currently restrict access to credit for the real sector; and reduce the size of government to reallocate scarce resources from operating expenses to capital expenditure.”
The expert concluded with a pointed reflection: “President Bola Tinubu has the opportunity to cement a historic legacy, but I think he’s more concerned about his re-election. He needs to stretch the tough choices and ride it to the end.”
Continuing, Prof. Iledare noted that while the administration came in with a clear agenda to reform, revitalise, and restore confidence in the oil and gas sector, it still struggles to overcome deep-rooted structural challenges that have long hindered progress.
He stated, “As President Bola Tinubu’s administration concludes its second year, the focus shifts to the performance of Nigeria’s pivotal oil and gas sector.
With an agenda to reform, revitalise, and restore confidence, the administration has taken notable steps but continues to grapple with deep-seated challenges.
Nigeria’s crude oil production remains below its 1.8 million barrels per day OPEC quota, fluctuating between 1.2–1.4 million bpd.
Persistent issues such as oil theft, pipeline sabotage, insufficient investment in upstream development, and the slow implementation of the Petroleum Industry Act hinder production potential.
Over the past two years, structural hurdles and missed opportunities have included inadequate fuel subsidy reforms without measures to mitigate the economic impact of subsidy removal.
Although subsidies were eliminated in 2023, inflation surged without sufficient social protection. Reforms within NUPRC and NMDPRA have been slow, and the depreciation of the naira has increased operating costs.
A coherent gas-to-power or clean energy roadmap has not been implemented.”
The energy expert further advised that “to boost crude oil production, the administration must strengthen security partnerships with host communities and private operators, implement fiscal incentives to attract investment, and resolve joint venture funding bottlenecks.
These policy actions are critical for achieving the target of three million barrels per day.
“Additional policy measures to enhance fuel availability and affordability include full operationalisation of the Dangote Refinery with transparent supply chains, expediting refinery rehabilitation efforts, and providing clear and stable regulations for private refiners.
He continued, “While the Tinubu administration has initiated vital reforms, their impact is constrained by systemic issues. With decisive, bold, and coordinated policy action, Nigeria’s oil and gas sector can become a driver of inclusive economic transformation.
To foster sustainable growth in the sector, the administration must adhere to the provisions of the PIA 2021 and maintain policy consistency to attract and retain investors.
Ensure transparency in oil transactions and refinery operations. Invest in human capital and local content development and strengthen public engagement to build trust around reforms.”
President Tinubu came to office with a clear mandate to fix Nigeria’s broken oil and gas sector. As the administration enters the second half of its term, the focus is shifting from promises to performance.
While significant targets—such as producing three million barrels per day and completing major gas infrastructure, are yet to be achieved, the groundwork is being laid for future progress.
The recent resumption of oil drilling in Ogoniland after decades of dormancy offers a symbolic and strategic win, pointing to improved dialogue and investment opportunities in historically restive areas.
With political will, private sector collaboration, and timely execution of reforms, Nigeria’s oil and gas sector has the potential to drive inclusive economic growth and regain its place in the global energy conversation.
Whether that potential is fully realised depends largely on how the next two years unfold.
