Nigeria’s Oil Industry in Retrospect

Nigeria’s oil and gas industry witnessed an eventful year in 2025, with several issues shaping the sector in significant ways. Peter Uzoho chronicles some of these issues in this report

Continuing from the previous year, 2024, the upstream, midstream, and downstream segments of the oil and gas industry in Nigeria recorded interesting activities that shaped the sector in several ways. There were low and high moments when viewing the sector from policy, regulatory, operational, commercial, and market perspectives.

In March, President Bola Tinubu signed an Executive Order titled, “The Upstream Petroleum Operations Cost Efficiency Incentives Order (2025),” aimed at reducing project costs, boosting investment, and increasing revenue in Nigeria’s oil and gas sector. The Order introduced performance-based tax incentives for upstream operators that achieve verifiable cost savings aligned with defined industry benchmarks. These benchmarks, based on terrain types such as onshore, shallow water, and deep offshore, will be published annually by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

Among its key provisions, the Order caps tax credits at 20 per cent of a company’s annual tax liability, ensuring strong fiscal incentives for efficient operators while safeguarding government revenues. The latest Executive Order builds on the 2024 reform directives, which enhanced fiscal terms, shortened project timelines, and aligned local content requirements with global best practices.

Notably, on February 28, 2024, President Tinubu signed three Executive Orders reaffirming the federal government’s commitment to improving Nigeria’s investment climate and positioning the country as Africa’s preferred petroleum sector destination. These Orders include: Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.) 2024;

Presidential Directive on Local Content Compliance Requirements, 2024; and Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines, 2024

Renaissance’s SPDC Acquisition

One of the cheery news for the petroleum sector in the first quarter of last year was the completion of the acquisition of Shell Petroleum Development Company (SPDC) by Renaissance Africa Energy Holdings, a consortium of four Nigerian independent oil and gas companies and one international energy firm. The completion followed the signing of a sale and purchase agreement with Shell in January 2024 at a total consideration of $2.4 billion and obtaining all regulatory approvals required for the transaction.

The Renaissance consortium includes ND Western Limited, Aradel Holdings Plc, FIRST E&P, Waltersmith Group, and Petrolin. Renaissance partner companies collectively have an asset base of over $3 billion and currently safely produce approximately 100,000 barrels of oil per day from 12 oil mining leases and operate two functioning modular refineries in Nigeria’s Niger Delta.

Renaissance joined four other Nigerian companies that successfully acquired onshore, shallow water, and swamp oil blocks formerly operated by international oil companies (IOCs) who have divested from the terrains and moved offshore. After meeting all ministerial and regulatory requirements, Oando took over Agip; Seplat took over Mobil Producing Nigeria Unlimited (MPNU); Chappal Energies took over Equinor; and Renaissance took over SPDC, effectively making Nigerian firms major players in the country’s hydrocarbon space.

Change of Guards

In April, the oil and gas industry experienced what some stakeholders described as “a tsunami” when President Tinubu sacked the Group Chief Executive Officer (GCEO) of the Nigerian National Petroleum Company Limited (NNPC), Mele Kyari; the board chairman, Pius Akinyelure, and other board members. The president also announced an 11-man board for the state oil company, with Bayo Ojulari, the former managing director of Shell Nigeria Exploration and Production Company (SNEPCo), named as the new GCEO, and Musa Kida, ex-TotalEnergies’ director as the new board chair.

Other members of the board included Adedapo Segun, chief financial officer; Bello Rabiu, Yusuf Usman, Babs Omotowa, Austin Avuru, David Ige, Henry Obih, Mrs. Lydia Shehu Jafiya, and Aminu Said Ahmed. Some of the concrete mandates handed to the new board included increasing investment in the oil and gas industry to $30 billion by 2027 and $60 billion by 2030; raising oil production to 2 million barrels daily by 2027 and 3 million daily by 2030.

Concurrently, the government wants gas production jacked up to 8 billion cubic feet daily by 2027 and 10 billion cubic feet by 2030. Furthermore, President Tinubu charged the new board to elevate NNPC’s share of crude oil refining output to 200,000 barrels by 2027 and reach 500,000 by 2030.

On the regulatory side, the year also saw a change of guards at the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) following the resignation of their then chief executives, Gbenga Komolafe and Farouk Ahmed, respectively. President Tinubu appointed Mrs. Oritsemeyiwa Eyesan to head NUPRC and Saidu Mohammed to lead NMDPRA.

The resignation and replacement of Ahmed at the NMDPRA followed months of running battles between him and the President of Dangote Refinery, who repeatedly accused him of sabotage, aiding the importation of substandard petroleum products through granting of licenses, undermining local refining, indulgence in economic corruption, and regulatory abuses.

War in the Downstream Sector

The year also saw Dangote Refinery locked in disputes with marketers and oil workers when it introduced its 4,000 compressed natural gas (CNG)-powered trucks to begin direct distribution of petrol to retail stations nationwide and its refusal to allow Dangote truck drivers to join labour unions. This led to resistance by the National Union of Petroleum and Natural Gas Workers (NUPENG) and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), who declared an industrial action and announced a blockade of sources of gas and crude oil supply to the refinery. The action unfortunately led to the shutdown of oil and gas production activities, petrol and cooking gas scarcity, and acute pain for Nigerians.

Stability Returned in Downstream

However, stability and normalcy returned with the intervention of the federal government, which led to some fruitful agreements between the warring parties. Also, in the area of supply and pricing, Dangote Refinery showed its capacity in the year, helping to reduce Nigeria’s import dependence, offering more affordable petrol, and finally eliminating product scarcity, especially during the Christmas and New Year season.

New Upstream FID Achieved

Within the year under review, SNEPCo, a subsidiary of Shell Plc, together with Sunlink Energies and Resources Limited, announced the Final Investment Decision (FID) on the HI gas field located offshore Nigeria, a deal coming 40 years after the discovery of the asset in 1985. The $2 billion project is anticipated to supply 350 million standard cubic feet of gas per day (mmscf/d), approximately 60,000 barrels of oil equivalent per day at peak production, to Nigeria Liquefied Natural Gas (NLNG), where Shell has a 26.5% interest. Production was expected to begin on the HI field before the end of this decade (2030).

The HI project has joined other big-ticket upstream projects promoted by the oil majors to increase Nigeria’s oil and gas reserve and production. Other such recent FIDs include the $350 million Iseni gas project by Shell, the $550 million Ubeta project by TotalEnergies, and the Bonga North project by Shell.

Rig Count and Production Rebound

Nigeria’s rig count as of October 2025 was 69, a geometric rise from a low of eight in 2021. Rig count is a key indicator for assessing the health and future production potential of the industry, investor confidence, and the demand for oilfield services. A higher rig count generally signals increased oil and gas production activity.

Also, oil production in 2025 oscillated between 1.6 to 1.7 million barrels per day, including crude and condensate, meaning that the country missed its target of hitting 2.06 million barrels per day as benchmarked in the national budget. Implementation of the Project 1 Million Barrels Incremental Production initiative introduced by the NUPRC to boost oil and gas production fetched over 250,000 barrels per day in 2025.

New Oil Licensing Round Begins

On December 1, 2025, NUPRC officially opened bids for interested local and foreign companies that possess technical, financial, and execution capacity to start applying for the 50 oil and gas blocks offered for sale in the second licensing round happening under the Petroleum Industry Act (PIA). The 50 blocks on offer comprise 15 onshore, 19 shallow water, and 15 frontier assets, as well as one deepwater asset.

The Nigeria 2025 licensing round is expected to attract about $10 billion in investments, add up to 2 billion barrels of oil output over the next 10 years, with an estimated 400,000 barrels/day of production volumes when the blocks are fully operational.