Nigeria’s Oil and Gas Sector Records Mixed Performance in 2025 Amid Production Shortfalls
Nigeria’s oil and gas industry ended 2025 with a mixed performance, showing gains in upstream activity and gas output but falling short of oil production targets. While new investments and operational improvements boosted certain metrics, the sector faced challenges including increasing gas flaring, domestic fuel supply disputes, and unmet budget production goals. Experts say the results underscore both the sector’s potential and the structural issues that need urgent attention.
Upstream activity improved notably in 2025, with the country’s rig count rising 63% year-on-year to 18 rigs in November, according to OPEC’s Monthly Oil Market Reports. However, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) reported a higher figure of 40 active rigs, highlighting discrepancies in official data. Despite the increase in exploration infrastructure, Nigeria produced an average of 1.5 million barrels per day (bpd) in 2025, below the 2.06 million bpd budget target, and OPEC noted that the country missed its 1.5 million bpd quota for much of the year.
On the gas front, Nigeria recorded stronger performance, producing 6,997 million standard cubic feet per day (mmscf/d) in October, up from 6,284 mmscf/d in September. Yet, gas flaring rose seven percent year-on-year, with September flaring alone accounting for 8.72% of total output. The NUPRC’s Nigerian Gas Flare Commercialisation Programme (NGFCP) awarded flare-gas permits to 28 investors, aiming to convert waste into economic opportunities, generate over 3GW of power potential, and produce 170,000 metric tons of LPG annually for 1.4 million households.
Domestic refining and fuel supply showed mixed results. The Dangote Petroleum Refinery, with a capacity of 650,000 bpd, supplied over 40 million litres of petrol daily, but official regulatory figures from NMDPRA estimated just 15 million litres. The discrepancy led to petitions against regulatory agencies, culminating in the resignation of key officials. Analysts argue that while upstream exploration and production improved, downstream operations and domestic fuel supply remain bottlenecks, requiring stronger policy support.
Local content in the sector improved to 61% in 2025, up from 56% the previous year, reflecting ongoing efforts to prioritize Nigerian participation in oil and gas operations. With the 2025 Oil Licensing Round already underway, the NUPRC aims to attract new investments, strengthen the gas value chain, and boost energy access across the country. Industry leaders, however, caution that a holistic approach is needed, balancing upstream growth, domestic refining, and environmental management to fully realize the sector’s potential.
source: vanguard