Nigeria’s upstream petroleum sector is recording increased activity, with crude oil production approaching 1.8 million barrels per day, active drilling rigs rising from about 14 in 2023 to more than 60, and over $8 billion in major Final Investment Decisions (FIDs) recorded since President Bola Ahmed Tinubu assumed office.
The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, disclosed this in his goodwill message at the National Summit of the Former Presiding Officers of State Houses of Assembly in Nigeria (FOPSHAN).
The summit was themed, “Bold Leadership, Bold Reforms: From Subsidy to Renewed Hope — Assessing the Economic Trajectory and Visionary Leadership of President Bola Ahmed Tinubu’s Administration.”
In a statement signed by Nneamaka Okafor, Special Adviser on Media and Communications to the Minister, Lokpobiri said the developments indicated a gradual reversal of the investment and production challenges that confronted Nigeria’s oil industry before May 2023.
He said any assessment of the administration’s performance in the petroleum sector must begin with the condition of the industry it inherited in May 2023.
According to him, the sector was then characterised by declining investment, crude oil production of about one million barrels per day, stalled divestment transactions and weak drilling activity.
Lokpobiri said the increase in drilling activity and investment decisions demonstrated renewed confidence in Nigeria’s upstream petroleum sector.
He added that the government’s reforms were aimed at creating a more predictable operating environment, encouraging investment and improving the country’s capacity to increase oil production.
“An assessment of the achievements of the Renewed Hope Administration must start from where we were as a nation before May 2023 and where we are today, particularly in terms of production capacity,” Lokpobiri said.
Since then, he said, production has recovered substantially, approaching 1.8 million barrels per day and exceeding that level at different points in 2026.
For an industry where production volumes determine not only export earnings but also government revenue, foreign exchange inflows and the utilisation of existing infrastructure, the recovery in output is a key indicator of whether upstream interventions are translating into actual barrels.
Lokpobiri attributed the improvement to a combination of measures, including improved security, greater regulatory certainty, resolution of long-standing industry challenges and efforts to attract fresh capital into exploration and production.
Rig count provides another measure of activity
Perhaps one of the clearest indicators of renewed upstream activity, according to the Minister, is the sharp increase in the number of active drilling rigs.
Lokpobiri said the number had increased from approximately 14 in 2023 to more than 60.
“A rig is not merely a number. It is capital deployed, wells being drilled, Nigerian contractors working, services being provided and ultimately new production. The rig today means production tomorrow,” he said.
The significance of the increase is that drilling activity provides an indication of capital deployment and field-development activity beyond headline production figures.
More rigs translate into more wells being drilled and, where commercially successful, additional reserves being developed into producing assets.
For Nigeria, which has spent years grappling with declining upstream investment and ageing producing assets, sustained drilling activity could therefore have implications for future production capacity.
$8bn-plus FIDs signal return of capital
Another development highlighted by Lokpobiri is the return of major investment decisions to Nigeria’s upstream sector.
The Minister said more than $8 billion in major FIDs had been secured since 2023.
The projects include the $5 billion Bonga North development, the $550 million Ubeta project and the $2 billion Shell HI project, with additional investments under consideration.
The return of FIDs is significant because an FID represents a point at which investors commit to proceed with a major development after assessing its commercial and technical viability.
However, the Minister stressed that FIDs should not be interpreted as an immediate increase in production.
“An FID taken today will deliver barrels tomorrow and several years from now. Infrastructure constructed today will support production for decades. What the President has done is not only address the challenges of today; he is rebuilding the productive capacity of the industry for tomorrow,” he said.
This distinction is particularly important in assessing Nigeria’s production outlook. Large offshore and upstream developments typically require substantial capital expenditure and extended development periods before new barrels reach the market.
Divestments and the changing ownership structure
Lokpobiri also drew attention to the conclusion of previously stalled divestment transactions involving major international oil companies.
According to him, the resolution of the transactions removed uncertainty surrounding important assets and created room for Nigerian operators to deploy capital and increase production.
He said indigenous companies now account for a significant share of national production, reflecting the expanding role of Nigerian operators in the upstream industry.
The development comes against the backdrop of a changing Nigerian petroleum landscape, where international oil companies have increasingly reassessed their portfolios while indigenous producers seek to take larger positions in mature and producing assets.
For the sector, the critical question remains whether new operators can deploy sufficient capital, technical expertise and operational capacity to maintain and increase production from the assets acquired.
Subsidy removal reshapes downstream economics
Beyond crude production, Lokpobiri said the Tinubu administration’s decision to remove petrol subsidy had fundamentally altered the economics of the downstream petroleum market.
He said the subsidy regime had cost Nigeria more than ₦4 trillion in 2022 alone, with expenditure at its peak estimated at approximately ₦18.4 billion per day.
The Minister argued that deregulation had created greater space for competition, private investment and domestic refining.
One of the most visible consequences has been the emergence of large-scale domestic refining capacity, particularly the 650,000-barrel-per-day Dangote Refinery, alongside other refineries and modular facilities.
The development is significant for Nigeria because increased domestic refining creates the possibility of connecting the country’s crude production directly with local petroleum-product supply, rather than relying predominantly on imported refined products.
Crude supply to local refiners
Lokpobiri said that connection between domestic crude production and domestic refining was already becoming more pronounced.
He disclosed that 53.7 million barrels of crude oil and condensate were supplied to local refiners during the second quarter of 2026, while Domestic Crude Supply Obligation performance reached 97.4 per cent.
The figures, he said, demonstrate increasing integration between the upstream and downstream segments of the petroleum value chain.
For Nigeria, the implications extend beyond refinery utilisation. Greater domestic crude supply to local refineries could affect crude evacuation, refinery economics, petroleum-product availability and the country’s dependence on imported refined products.
The bigger test: converting reforms into sustainable barrels
Despite the positive indicators cited by the Minister, the longer-term measure of the reforms will ultimately be whether increased drilling and investment decisions translate into sustained production growth, stronger government revenues and greater domestic value creation.
Lokpobiri said the government’s focus was not merely on short-term production gains but on rebuilding the productive capacity of the industry.
“The story of this administration in the petroleum sector is not just about what we have achieved today. It is about the productive capacity we are building for tomorrow,” he said.
He added: “We have a President who understands that capital goes where it is welcomed. Our responsibility at the Ministry is to translate his policy direction into an environment where investors can come, where existing operators can expand, where Nigerian companies can grow and, most importantly, where those investments translate into production and economic value for the Nigerian people.”
The Minister acknowledged that many of the projects now being developed would take years before reaching full production.
“Some of the projects being developed today will deliver in 2027, others in 2029 and beyond. That is the normal development cycle of major oil assets. The rig today means production tomorrow. The FID today means barrels tomorrow. The infrastructure we build today will serve Nigeria for decades,” he said.
For the petroleum industry, therefore, the emerging picture is one of a sector attempting to move from managing declining production and weak investment to rebuilding upstream capacity, attracting fresh capital and expanding domestic refining.
The administration’s stated objective, Lokpobiri said, is to sustain production growth, deepen investment, expand domestic refining and ensure that Nigeria captures greater economic value from its petroleum resources for both present and future generations.
SOURCE: The Nation Nigeria
