Preamble
Paresident Bola Tinubu began his third year of a four-year presidency of the Federal Republic of Nigeria on May 29, 2025. The administration has taken steps over the last two years to reform the oil and gas sectors, but continues to face significant challenges:
Crude oil production in Nigeria remains below its OPEC quota of 1.8 million barrels per day (bpd), currently between 1.2–1.4 million bpd. Key issues affecting production include persistent oil theft and pipeline sabotage, insufficient investment in upstream development, and slow implementation of the Petroleum Industry Act (PIA). Notably, the significant drop in the deep-water oil output has dropped to its lowest level in five years, raising alarms across the energy sector. This decline comes despite major reforms, including the Petroleum Industry Act (PIA) and recent Executive Orders, aimed at reviving upstream investment. The current deepwater production slump is attributable to delayed and incomplete implementation of reforms, rather than the reforms themselves. To reverse this trend, Nigeria must prioritise the delivery of performance over policy intent. If managed decisively, deep-water oil could remain a cornerstone of the nation’s economic stability and energy future.
In the downstream petroleum sector, local refining capacity is developing but not fully realised. Despite the partial launch of the Dangote Refinery, Nigeria still imports a large portion of its refined petroleum products. Delays in rehabilitating state-owned refineries, inconsistent regulations for modular refineries, and the ongoing burden of fuel importation are obstacles to affordable transportation fuel availability. Structural hurdles and missed opportunities over the past two years include fuel subsidy reform without measures to mitigate the impact of its removal on the economy. Subsidies were removed in 2023, leading to inflation without adequate social protection. Reforms by NUPRC and NMDPRA are sluggish, PIA mandatory Boards of Directors have not been appointed, and Naira depreciation has increased operating costs.
Regarding Nigeria’s gas sector, despite its promise as a transition fuel, it remains stalled by infrastructure deficits, price controls, and weak investor confidence. While the “Decade of Gas” sets a bold vision, execution has lagged. However, recent Presidential Executive Orders—especially the 2025 Cost Efficiency Order—offer a renewed push for reform, aiming to cut red tape and boost private sector confidence. Private-led projects like the Dangote Refinery also show potential to shift Nigeria’s position in global energy markets. But real progress demands more than policy; it requires a transparent, efficient, and accountable partnership between government and industry. The era of state-led inertia is over. At this critical juncture, Nigeria must act decisively to address structural bottlenecks. The opportunity is real, but so is the risk of being left behind. Now is the time to move from diagnosis to delivery, turning energy potential into economic prosperity.
This op-ed discusses significant issues and strategic considerations in Nigeria’s developing energy landscape under President Tinubu’s administration. As the third year commences, oil and gas issues, challenges, and opportunities remain prominent topics as the 2027 elections are on the radar. Notable topics include executive orders impacting PIA2021, infrastructure setbacks, the balance between oil dependence and green ambitions, declining deepwater production, and the connection between petroleum and politics. The first month of the third year highlighted some contradictions within Nigeria’s regulatory and policy framework for the oil and gas sector, emphasising the complexity of industry governance. Change is a constant factor in this landscape.
Nigeria’s Oil and Gas Dilemma: Reform Without Results?
Crude oil remains Nigeria’s economic lifeline, generating over 70% of export earnings and funding a significant portion of the national budget. Yet, oil production has declined to between 1.2 and 1.4 million barrels per day, well below the OPEC quota of 1.8 million. The reasons are familiar: oil theft, pipeline sabotage, ageing infrastructure, and continued divestments by International Oil Companies (IOCs).
The Petroleum Industry Act (PIA) and the commercialisation of NNPC into NNPC Limited were hailed as game-changers. But for two years in, the reforms have not lived up to expectations. NNPC remains opaque, and allegations of N200 trillion in missing revenue now under Senate investigation raise fresh concerns about governance and accountability and political interference. While global crude prices offer some fiscal breathing room, they also expose Nigeria’s vulnerability to external shocks. Oil price booms have rarely translated into long-term structural improvements. Instead, they mask inefficiencies and deepen dependency.
Nigeria must move beyond the optics of reform to the substance of transformation. This means enforcing transparency in the operations of NNPC, strengthening regulatory institutions, and investing in midstream infrastructure, particularly gas pipelines and processing facilities. It also requires restoring investor confidence and confronting security risks head-on. Equally urgent is the need to accelerate local refining. Continued importation of petroleum products weakens the naira, fuels inflation, and undermines energy security. The Dangote Refinery offers promise, but only if supported by consistent policy and fiscal discipline. Ultimately, reform must be measured not by what is promised but by what is implemented. Nigeria’s oil and gas sector cannot continue as business-as-usual. The future demands courage, competence, and a commitment to real change.
Nigeria’s Fuel Subsidy Removal: Reform, Relief, or Reversal?
For decades, Nigeria’s fuel subsidy drained public finances, enriching middlemen, smugglers, and the elite. Costing over N4 trillion annually, it became unsustainable for a country facing rising debt, declining oil output, and critical development needs. Its removal in 2023 marked a bold step. Since then, the government claims to have saved over N7 trillion — funds supposedly redirected to infrastructure, health, education, and social welfare.
The policy also aimed to liberalize the downstream sector. With the Nigerian National Petroleum Company Limited (NNPC) no longer the sole petrol importer, competition has emerged. Local refining — especially with the Dangote Refinery — could stabilize prices over time and reduce reliance on imports. Yet, the socioeconomic impact has been harsh. Fuel prices tripled, transportation and food costs soared, and inflation exceeded 33% by early 2025. The removal hit small businesses hard, many of which have been downsized or shut down. Unemployment and poverty are on the rise. Though the government rolled out palliatives — cash transfers, food aid, and transport subsidies — these have been slow, uneven, and poorly coordinated. Citizens’ trust in the reform is eroding.
No credible economist disputes the long-term logic of subsidy removal. But executing such a policy without strong social safeguards risks solving a fiscal problem while deepening a humanitarian crisis. The challenge now is to turn fiscal gains into visible, inclusive development. The government urgently needs to scale up social support — expand school feeding, improve public transport, and accelerate local refining. Above all, it must show transparency. Nigerians deserve to know how the savings are being spent. The subsidy era may be over, but reform is far from complete. Two years on, Nigeria stands at a crossroads: double down on inclusive, accountable governance, or allow short-term pain to derail long-term progress.
Nigeria’s Downstream Market Trends and the Influence of Dangote
The entry of the Dangote Refinery into Nigeria’s domestic fuel supply chain is a game-changer. With its massive capacity, it promises to stabilize supply and conserve foreign exchange. But it’s also raising questions about competition, market power, and the role of regulation.
Dangote’s vertically integrated model—refining and retailing under one umbrella—has independent marketers worried. By supplying directly to filling stations, the refinery sidesteps traditional distributors. This could reduce pump prices by cutting logistics costs and middlemen, while improving efficiency, transparency, and product quality. It may also curb hoarding and artificial scarcity, longstanding problems in Nigeria’s fuel supply system.
Still, if Dangote captures a dominant market share, smaller players could be squeezed out. That wouldn’t constitute a monopoly unless regulatory or structural barriers prevented new entrants. There may be some job losses, but expansion in logistics and retail could create new opportunities. Critics point to possible unfair advantages—preferential financing, regulatory flexibility—that could tilt the playing field. These concerns are valid, but the real issue isn’t Dangote’s scale. It’s whether Nigeria’s regulators are prepared to promote and protect fair competition.
The Petroleum Regulatory Authority must rise to the occasion. Transparent pricing, non-discriminatory product access, and a level playing field are non-negotiable. Rather than penalize efficiency, regulators must dismantle the structural barriers—poor infrastructure, limited finance—that limit broader participation. If well managed, Dangote’s refinery could catalyze transformation — not domination — in Nigeria’s downstream sector.
Nigeria’s Natural Gas Development Trend
The launch of 4,000 compressed natural gas (CNG) tankers by Dangote marks a significant boost to Nigeria’s gas infrastructure. This private sector-led initiative aims to decentralize energy access, reduce transport costs, and increase nationwide availability of CNG. It aligns with Nigeria’s clean energy transition by encouraging a shift from diesel and petrol to gas, particularly in transport and small-scale industries. Benefits include enhanced fuel efficiency, job creation, and a stronger foundation for a gas-driven economy.
However, concerns persist over market dominance. Dangote’s past influence in sectors like cement and sugar has raised competition issues, prompting fears of oligopolistic control. These risks make strong regulatory oversight essential, especially in a deregulated downstream environment. It is important to ensure open access to infrastructures such as CNG refuelling stations and to protect smaller market players from being edged out.
Regulators must enforce fair play and promote inclusivity to prevent monopolistic outcomes. To this end, Nigeria should appoint technically competent professionals to the petroleum regulatory bodies and ensure ethical, transparent management. The advantages of CNG adoption must not be controlled by one entity but should be equitably distributed across the market.
Despite having Africa’s largest proven gas reserves, Nigeria’s domestic gas use remains low due to underdeveloped infrastructure. The main barrier is not geology but financing. Pipelines, processing, and distribution networks demand substantial investment, but investors face uncertainty due to volatile pricing, regulatory instability, and weak offtake assurances—especially in the power sector.
Bridging this gap requires improving project bankability. Transparent pricing, stable policies, and enforceable contracts are vital. Public-private partnerships should be scaled up with risk guarantees and credit enhancement tools. Nigeria must also explore innovative financing such as infrastructure bonds, diaspora funds, and green investment platforms. Stimulating demand through industrial zones and city gas networks will further encourage investment. With strategic reforms and targeted financing, Nigeria can build a cleaner, gas-powered industrial future.
Implementation of PIA and Its Impact on Investor Confidence
More than three years after the enactment of the Petroleum Industry Act (PIA) 2021, there are growing concerns that its core objectives of transparency, institutional reform, and investor confidence are being undermined. A key issue is the potential erosion of the PIA’s fiscal framework through new tax bills that conflict with its stability clauses. Such legislative overreach could discourage badly needed investment in Nigeria’s oil and gas sector and unravel one of its most significant policy achievements.
The PIA was designed to depoliticise Nigeria’s oil and gas (NOG) governance by separating roles across policy formulation, regulation, and commercial operations. In theory, the Minister of Petroleum would act as the policy lead, while regulatory institutions like the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) would operate independently. However, in practice, no independent policy institution has emerged. Instead, the Presidency increasingly functions as the de facto policy authority, echoing the outdated Petroleum Act of 1969 rather than the reformist spirit of the PIA.
A clear example is the directive for the Minister to act in the absence of the governing boards of the regulatory agencies, undermining their autonomy and centralizing power. This contradicts the very foundation of institutional independence that the PIA was meant to guarantee. Meanwhile, with the 2027 general elections approaching, there is a renewed push for oil and gas exploration in the Northern Basins. This recurring political play—featuring buzzwords like “historic discovery” and “untapped reserves”—often lacks technical and regulatory backing. While the Minister can approve licenses, the NUPRC must grant regulatory consent. The blurring of these roles, amplified by political messaging, erodes the legal clarity the PIA sought to establish. Such pre-election narratives often serve as political symbolism rather than genuine energy policy. They raise the question: Are these announcements based on evidence, or are they crafted for electoral theatre? Public discourse must distinguish between technically sound exploration and political grandstanding.
Adding to the unease is the recent claim of N200 trillion “missing” at NNPC. The allegation has reignited memories of past scandals, such as the Second Republic’s $2.8 billion saga. While these figures provoke public outrage, they demand context. Under Nigeria’s Joint Venture (JV) model, revenues from crude oil are first shared according to equity stakes, with deductions made for costs, taxes, and royalties before government receipts are realized. The N200 trillion may reflect gross JV revenue, not missing funds. Without distinguishing gross from net revenue, public trust is strained.
What Nigeria needs is not another round of blame games, but clear, professional reconciliation of accounts. Public disclosures must be accurate, independently verified, and easy to understand. Until then, the JV model will remain vulnerable to politicization rather than being appreciated as a key fiscal tool. From an investment perspective, the signals are troubling. Executive overreach, blurred institutional roles, and politicized reform create an unstable climate for exploration and production (E&P) investment.
The capital that should flow into Nigeria’s energy sector has slowed to a trickle. Both local and foreign investors are watching—and hesitating. The reality is that investor confidence depends on three pillars: policy stability, regulatory independence, and institutional credibility. Until Nigeria recommits to these principles and fully implements the PIA in letter and spirit, its oil and gas sector will struggle to reach its potential.
Summary and Conclusion
Nigeria’s oil and gas sector stands at a pivotal crossroads, shaped by persistent challenges and the pressing need for reform. Despite its central role in the national economy, Nigeria’s crude oil production remains below its potential due to theft, sabotage, underinvestment, and regulatory delays. The government’s efforts, including the passage of the Petroleum Industry Act (PIA), the removal of fuel subsidies, and initiatives to boost gas infrastructure and local refining, signal progress but have yielded mixed results due to inconsistent implementation, political interference, and insufficient social protections.
The recent entry of private sector players like Dangote Refinery has the potential to transform fuel supply and efficiency, yet raises concerns regarding competition and market dominance. Meanwhile, the gas sector, with its vast reserves, is hampered by inadequate infrastructure and an uncertain investment climate.
Restoring investor confidence—and, by extension, the sector’s growth—requires unwavering adherence to policy stability, regulatory independence, and transparent governance. Real reform will be measured not by policy announcements, but by their full and fair execution, the strengthening of oversight institutions, and the equitable distribution of resulting benefits.
As Nigeria navigates toward 2027 and beyond, it must prioritize the welfare of its people in energy policy, ensuring that economic development, social protection, and sustainability move forward hand in hand. Only then can the nation truly harness the promise of its energy resources for lasting prosperity.
OMOWUMI O. ILEDARE, PhD, Sr.
Fellow USAEE, Fellow NIPetE, Fellow
EI, Professor Emeritus, Louisiana
State University, Baton Rouge, USA &
Executive Director, Emmanuel Egbogah
Foundation, Abuja, Nigeria.
Email:wumi.iledare@iaee.org