According to the Bloomfield LP Energy (Oil and Gas) Sector 2025 Report, Nigeria’s oil and gas sector is poised for significant shifts in 2025. A new petroleum licensing bid round, emphasizing fallow assets and natural gas development, aims to align with Nigeria’s commitment to the United Nations Sustainable Development Goals.
The anticipated completion of the Kaduna and Warri refinery rehabilitations could add as much as 235,000 barrels per day to domestic refining capacity. Meanwhile, the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline, a 614-kilometer project, is expected to deliver 3,500 million standard cubic feet of gas daily, potentially reshaping the country’s energy infrastructure.
Despite these ambitions, concerns linger. Oil theft, pipeline vandalism, and economic instability continue to cast a shadow over the sector. Policy clarity and regulatory reforms remain essential to sustaining investment and ensuring market stability.
Nigeria’s oil production climbed 14 percent in 2024, reaching an average of 1.54 million barrels per day, up from 1.34 million in 2023, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), as cited in the Bloomfield LP Energy (Oil and Gas) Sector 2025 Report. Yet, this improvement fell short of both the government’s budgetary projections of 1.78 million bpd and the Organization of Petroleum Exporting Countries’ (OPEC) quota.
Key Developments in Refining Capacity
The commissioning of the Dangote Refinery and the rehabilitation of the Port Harcourt Refinery marked significant milestones in domestic refining capacity. The Dangote Refinery, inaugurated in September 2024, began loading Premium Motor Spirit (PMS) after earlier producing jet fuel and naphtha.
However, regulatory tensions have marred these achievements. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) accused the Dangote Refinery of producing substandard diesel and engaging in monopolistic practices, while the refinery refuted the claims and criticized the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for failing to enforce domestic crude supply obligations.
Policy Shifts and Incentives
In February 2024, President Bola Ahmed Tinubu announced a series of executive orders designed to attract investment and streamline operations. Key among them was the Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024, offering gas tax credits and other fiscal benefits aimed at deepwater oil and gas projects.
Additionally, the Presidential Directive on Local Content Compliance sought to tackle high operating costs and project delays, both longstanding deterrents for foreign investments.
Petroleum Licensing and International Divestments
In May 2024, the NUPRC launched a petroleum licensing bid round, culminating in the award of 25 new oil blocks in December. Simultaneously, international oil companies (IOCs) such as Chevron, ExxonMobil, and Shell continued to scale back their Nigerian operations. Shell, for instance, sold its onshore assets to Renaissance Africa Energy for $2.4 billion.
Challenges with Domestic Supply and Pricing
While the operationalization of the Dangote and Port Harcourt refineries signaled progress, domestic supply challenges persisted. The much-publicized ‘Naira-for-Crude’ initiative, aimed at reducing foreign exchange dependence by pricing crude sales in Naira, faced setbacks. Dangote Refinery alleged that the Nigerian National Petroleum Company Limited (NNPCL) failed to meet the agreed minimum crude supply of 385,000 bpd, undermining the deal’s intended market stability.
Cleaner Energy and CNG Expansion
In line with global trends towards cleaner energy, the Federal Government expanded its Compressed Natural Gas (CNG) Initiative in 2024. A ₦10 billion Credit Access for Light and Mobility Fund (CALM Fund) was launched to support vehicle conversions to CNG. The rollout included the deployment of 15 locally manufactured CNG-powered buses in Abuja, offering free rides for an initial 40 days.
Nigeria’s oil and gas sector in 2024 demonstrated both progress and persistent challenges. As the nation moves into 2025, the focus will need to remain on regulatory clarity, infrastructure development, and policy stability to fully realize the sector’s potential for growth and sustainability.