Coronation Group Predicts 1.8m Bpd Oil Output Despite FG’s Optimistic 2.5m Bpd Projection

Says fiscal, regulatory environment to play central role in shaping performance

Emmanuel Addeh in Abuja

Coronation Group has projected that Nigeria’s crude oil production will stabilise at between 1.7 million barrels per day and 1.8 million bpd in 2026, falling significantly short of the federal government’s generally optimistic 2.5 million bpd target.

Coronation Group is a Nigerian financial services company that manages investments, provides wealth and asset management, offers insurance, and delivers capital market and financial advisory services to individuals and institutions.

In its review of 2025 and outlook for 2026, the Group said the oil and gas industry remained a key contributor to the economy in 2025, despite a challenging pricing environment and declining output.

According to Coronation Group, crude petroleum and natural gas accounted for about 0.81 per cent of nominal GDP in the first nine months of 2025, although sectoral output fell sharply by 20.13 per cent year-on-year to N6.49 trillion, largely driven by weaker crude oil prices.

The firm noted that crude oil exports also contracted by 11.30 per cent to N24.92 trillion over the same period, reflecting both lower global prices and the early impact of emerging local refinery capacity, which may have diverted some crude away from export markets. These pressures, it said, combined with persistent production challenges to weigh on headline sector performance.

Although modest month-on-month gains were recorded in April, June, July and October, the Group said these intermittent improvements were insufficient to restore production to levels seen at the beginning of the year. As a result, output remained well below both the 2025 budget benchmark of 2.06 million bpd and Nigeria’s OPEC quota of 1.5 million bpd.

Against this backdrop, the firm’s 2026 forecast of 1.7–1.8 million bpd stands in contrast to the more optimistic projections from regulators and state-owned entities. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) had set a target of 2.5 million bpd, while the Nigerian National Petroleum Company Limited is aiming for 2.0 million bpd in the medium term.

But Coronation Group said its more conservative outlook reflects a realistic assessment of incremental capacity additions rather than a sudden structural turnaround.

“Looking ahead, we expect oil production to stabilise between 1.7-1.8 mbpd in 2026, lower than the NUPRC’s 2.5 mbpd and the NNPC’s 2.0 mbpd medium-term targets (2027),” the report added.

The forecast factored in expected production increases from key private operators. Seplat Energy, for instance, is targeting a ramp-up to 200,000 bpd over the next five years, from about 135,000 bpd in the first half of 2025.

Renaissance Energy is also expected to play a role, with plans to raise output to 300,000 bpd by early 2026, up from around 230,000 bpd as of August 2025. While these additions are meaningful, Coronation Group said they are unlikely, on their own, to bridge the gap between current output and the federal government’s ambitious production targets.

Beyond operational issues, the firm highlighted proposed amendments to the Petroleum Industry Act (PIA) as one of the most consequential developments in the upstream sector during the year.

The proposed changes are aimed at curbing what the government describes as statutory leakages and improving direct oil inflows into the Federation Account. Central to the proposal is a reallocation of ownership interests, including vesting some stakes in the Ministry of Finance Incorporated and redefining the role of the NUPRC.

While the restructuring is intended to strengthen fiscal flows, Coronation Group warned that it raises governance concerns. These include the concentration of regulatory and commercial powers within the NUPRC, blurred accountability lines and a heightened risk of conflicts of interest.

Besides, the firm pointed to the rationale for transferring some ownership to MOFI, noting concerns that the Ministry of Petroleum Incorporated may be too closely aligned with NNPC to provide truly independent oversight.

Beyond today, the firm said fiscal and regulatory developments would play an increasingly central role in shaping sector performance. The newly introduced National Tax Act (NTA), it said, brings sweeping changes to tax obligations across the oil and gas value chain.

A minimum effective tax rate of 15 per cent now applies to all companies, including upstream operators that previously benefited from tax credits linked to greenfield gas projects and economic development incentives. This, Coronation Group said, would force companies to reassess the value of long-standing incentives relative to their overall tax burden.

Overall, Coronation Group said 2025 was marked by softer global oil prices but meaningful operational gains in upstream and midstream segments, supported by recent acquisitions, improved evacuation performance and expanding gas infrastructure.

“Looking ahead, fiscal and regulatory developments will play an increasingly central role in shaping performance. The new National Tax Act (NTA) introduces profound changes to tax obligations across the oil and gas value chain.

“A minimum effective tax rate of 15 per cent now applies to all companies—including upstream operators previously benefiting from tax credits associated with greenfield non-associated gas projects like Seplat’s ANOH Gas project and entities enjoying Economic Development Tax Credits.

“This change requires companies to reassess the net benefit of long-standing incentives relative to their total tax burden. Midstream gas operators must now file estimated income tax returns and make monthly tax payments, aligning their obligations with upstream operators,” it stated.