In developing this year’s outlook, we referenced the 2015 version to explore significant developments in the key items over the last 10 years.
What we found was some accuracy on some of the key items, but overall, it can be fairly concluded that the oil and gas industry in Nigeria had experienced a lost decade until 2024/25.
Most of the initiatives anticipated are still being discussed.
The industry has undergone a CPR in the last two years as evidenced by the stable and improved fiscal regime, a soother operating climate, increased production, M & As and a flurry of Final Investment Decisions (FIDs).
In this outlook, we have highlighted key issues that would shape the oil and gas industry in Nigeria in 2026.
According to the upstream regulator, NUPRC, Nigeria’s crude oil and condensate production averaged 1.64 million barrels per day for most of 2025, a 6% increase from 1.58mmbopd recorded in 2024. A 6% annual growth is an outlier amongst peer oil-producing countries because the typical growth rate is between 1-3% for countries that manage to increase production.
Nigeria’s outlier performance can be attributed to asset restoration efforts, better operating climate, performance of NNPC E & P Limited and the settling in of the successors of SPDC and Exxon in the onshore/shallow water fields.
What does this forebode for 2026? The clue is in the 2026 – 2028 MTEF document approved by FEC in December 2025, where a benchmark and target production of 1.8 mmbbls/day and 2.06mmbls/day, respectively, were established. The benchmark has been very moderate compared to earlier years, but still anticipates a ~10% production growth, which is still quite an elevated target.
The industry is in an excited state – rig count is at the highest, service firms are busy, Original Equipment Manufacturers are fully booked, and with 79 Field Development Plans (FDPs) approved by the regulator in 2024/2025, production will be on the incline baring any significant social headwind. It is, however, important to manage expectations about a big upswing, but rather expect a smooth but steady uphill ride.
One of the most fascinating events in the industry in 2026 is the anticipated divestment by NNPC of some of its equity in certain assets. Various credible media outlets have reported that a portal has been open for interested bidders who need to register online by January 10.
This is expected to be followed by a series of processes that include pre-screening and access to a secure virtual data room. There will be a prequalification based on technical and financial capacity, document evaluation, negotiations and regulatory approvals.
Reuters has reported a proposed sale of up to 25% while the Labour Union had protested the sale in late 2025, where they indicated the divestment could be around 30 – 35% equity. It is difficult to ascertain what the actual divestment terms and conditions would be – full divestments or partial stake reductions, but the outcome will reshape the Nigerian oil and gas industry.
It is simple to project that existing JV partners may be interested or even prioritised if the typical Right of First Refusal that is customary in global joint ventures is applicable.
We have witnessed a consolidation of shareholders in the Renaissance Energy shareholding structure via Aradel/ND Western. Are they now better positioned to acquire more equity? With Maurel & Prom out of the picture in Seplat, what happens to the ex-Exxon-owned onshore fields?
Will the cash rich middle eastern NOCs and sovereign wealth funds (ADNOC/PIF/ONHYM) deploy cash to take equity for strategic reasons? Since NNPC is a limited liability company, how will it deploy its new capital? The outcome of the divestment may not be known but it is quite easily predictable that it will bring a significant change to the structure of Nigeria’s oil and gas industry?
To reinforce the lost decade phenomenon, Nigeria did not conduct a bid round for fifteen years (2005 – 2020), leading to the current low production levels and consequential economic challenges. Since 2020, Nigeria has now had five NUPRC bid rounds, including the 2025/26 round, which consists of 15 onshore blocks, 19 shallow-water blocks, 15 frontier acreage blocks and 1 deep offshore block.
To reinforce the lost decade phenomenon, Nigeria did not conduct a bid round for fifteen years (2005 – 2020), leading to the current low production levels and consequential economic challenges. Since 2020, Nigeria has now had five NUPRC bid rounds, including the 2025/26 round, which consists of 15 onshore blocks, 19 shallow-water blocks, 15 frontier acreage blocks and 1 deep offshore block.
Unlike the 2022 bid round, this round has more onshore/shallow water blocks, which will spark more interest from local operators. Signature bonuses are expected to range from US$3 million to US$7 million, among other financial obligations. The bids will be open to Nigerian and foreign companies via a Nigerian entity and the designated operator in a consortium must hold a minimum of 30% participating interest.
With NNPC also at the cusp of a divestment campaign, this bid round might not gain the expected traction compared to the 2022-2024 class. NNPC’s equity sale may be more premium priced, but it comes with available infrastructure, immediate cash flow and potential near-term upside, while the NUPRC 2025/26 fields will still require investments and longer lead time.
Existing operators proximate to these PMLs in the bid round may be more inclined to bid to take advantage of synergies. IOCs may be interested in the frontier assets on the eastern flank/Dahomey basin but take less interest in the northernmost PMLs and with the deepwater blocks very limited, it will be fascinating to watch their participation.
There is a consensus that crude oil prices in 2026 will remain in the lower range of 2025’s prices – $55 – $60 per barrel. The EIA and IEA, which are typically dovish on oil prices, are sticking to an average of $55/barrel while the market, as reported by Reuters suggest an average of $61 per barrel.
The expected surplus production of around 3.8 million barrels per day reinforces the oversupply narrative, and as witnessed in 2025 during the US bombing of Iran, the market is in its most inelastic state in a generation. Supply and demand outlook is fairly well established, but prices have remained neutral to significant geopolitical events involving major producers like Russia, Iran.
With the increased instability in the Middle East, we may see short-term price spikes or volatility, and on the other hand, if inventories build too high or if the global economy softens and demand underperforms further, prices could dip below $50/barrel.
OPEC and OPEC+ production cuts may help stymie oversupply as from Q2 and help keep prices elevated. Current crude oil prices are beyond the $60/barrel budget benchmark leaving production target of 1.8mmbbl/day as the likely lagging variable in the fiscal plans for 2026.
All things being equal, the Africa Energy Bank should commence formal operations in 2026 after a delay in meeting capitalisation commitments and governance procedures.
The bank is designed as a multilateral development finance institution with an initial target capital base of about USD 5 billion, with members from APPO member countries and support from AFREXIM. Concerns about the future of AFREXIM are around the change in leadership in both AFREXIM and APPO.
The erstwhile leaders of both organisations were Nigerians, a country with substantial oil and gas resources, more susceptible to the debt constraint that comes with energy transition.
The progress made on the operationalization of the Energy Bank in 2026 will tell NLNG if the new CEOs of APPO and AFREXIM have the motivation to see through the operationalization of the Energy Bank.
NLNG have been the single biggest victim of the ‘lost decade’ because it’s solely dependent on upstream production performance. As per the NLNG annual Facts and Figures published in 2024, NLNG’s revenue dropped by 45% from $10.79Billion in 2014 to $5.840Billion in 2023 with dividends to NNPC/Nigeria dropping by 40% from $1.389 Billion to $820 Billion.
Utilisation rate reduced to as low as 65%, but as per media reports, NLNG has exported the highest number of cargoes in its recent history in December 2025. If the incline in crude oil production continues and some of the Gas Sales and Purchase Agreements it executed in 2025 start supply, NLNG may bounce back from its recent torrid past despite muted LNG prices.
Nigeria’s Gas Master Plan and the Decade of Gas program, at its core, is focused on developing crucial gas infrastructure such as pipelines, gas processing facilities, and liquefied natural gas (LNG) plants to increase production, processing, and development of gas across the country.
In 2026, the first segment of the 614km Abuja-Kaduna-Kano (AKK) pipeline is expected to be completed, with gas flowing to the northern part of the country. The Oben/Obiafrom – Oben pipeline completion has been delayed by the crossing of the River Niger. It is difficult to project whether that technical difficulty can be overcome in 2026.
With Seplat, a gas-focused company nested in the easternmost flank of the Niger Delta, expect traction around a transmission line that could take away gas from that stranded axis.
The Midstream Gas Infrastructure Fund (MDGIF) has raised over $400 Million since 2021, with its disbursement largely on micro projects. In 2026, it is expected that investments may shift to larger-scale and more large scale and impactful projects that will drive the gas aspirations of the country. As gas flare penalties bite and CAPEX for greenfield gas plants become more prohibitive, 2026 may be the year the gas hub development anticipated in the 2008 Gas Master Plan takes shape.
Aliko Dangote wants to stop the importation of petroleum products, particularly PMS. Importation will not stop in 2026 or in the foreseeable future. As per NMDPRA’s December 2025 Fact Sheet, the Dangote refinery operated at 62.94% with an average daily supply of 32million liters per day.
Compared to the established national PMS consumption rate of about 50 million litres (seasonal Dec. 2025 demand was 62 million litres), there is a huge gap that must be filled by imports to avoid queues or inadequate Stock Sufficiency.
To ensure energy security, PMS Stock Sufficiency of over 30 days is the baseline, but the domestic refiners cannot meet that requirement at the moment. Dangote has to significantly improve its utilization rates to meet global standard of 90 – 95% to bridge the gap that importers are filling.
As for the 15% ad valorem levy on fuel imports that was approved in October 2025 but later suspended, it is unlikely to be returned with the current insufficient domestic supply and the Presidential elections scheduled for next year.
All the downstream companies listed on the Nigerian Stock Exchange posted disappointing results in 2025 indicating a significant structural sector shift largely as a result of the Dangote refinery. Beyond the NGX, downstream companies are facing strong headwinds with the competitive pricing environment and threat of fiscal barriers, particularly for those with their facilities in the South-West of Nigeria.
The further downstream companies are from the Lagos axis, the better their margin. For downstream companies with jetties in the South-South, the transport premium ex-Lagos has helped retain some of their margins.
Consolidations will happen sooner than later for downstream companies that are exposed to the price war in the Lagos axis via acquisitions, merger of strategic partnerships with Dangote. We may also witness pivots from core downstream businesses as NIPCO did earlier than others by shifting resources from downstream fuel products to downstream gas and compressed natural gas. If the 15% ad valorem levy is reinstated, we may even witness quicker consolidations as margins for importers get squeezed. It surely won’t be a boring year in the downstream sector.