Nigeria’s oil and gas sector is showing signs of a slow but steady recovery, driven by regulatory reforms, rising indigenous participation and renewed investor confidence, despite persistent production and security challenges.
Gatekeepers News reports that this was disclosed by the Partner and Clients and Market Leader at PwC Nigeria, Pedro Omontuemhen, during a presentation at the Lagos Chamber of Commerce and Industry (LCCI) 2026 Economic Review and Outlook Conference.
Speaking on the theme, “Oil and Gas Sector Performance and Outlook – Trends, Challenges and Prospects in Nigeria’s Oil and Gas Industry,” Omontuemhen said that although the sector still faces structural constraints, recent policy actions and market shifts are helping to stabilise output and restore confidence.
According to him, Nigeria’s crude oil production averaged about 1.64 million barrels per day (bpd) in 2025, an improvement over previous years but still below the country’s estimated potential of over two million bpd.
He attributed the shortfall to oil theft, ageing infrastructure, operational inefficiencies and years of underinvestment across major production assets.
Omontuemhen revealed that reforms introduced under the Petroleum Industry Act (PIA), alongside recent executive orders, have helped attract over $16 billion in new investments into the sector.
He explained that the reforms have improved fiscal clarity, strengthened regulatory oversight and encouraged greater participation by indigenous operators. However, he noted that many local firms still face funding and security challenges, especially in onshore areas affected by crude theft and pipeline vandalism.
The PwC partner said the sector’s contribution to the economy remains modest but stable, with oil and gas accounting for 3.44 per cent of Nigeria’s Gross Domestic Product (GDP) in Q3 2025, slightly higher than 3.38 per cent recorded in the same period of 2024.
He linked the marginal growth to firmer oil prices, improved security in some producing areas and better performance by indigenous operators.
Omontuemhen added that global demand for petroleum products remains strong despite the energy transition. He said gasoline and diesel demand are projected to rise steadily through 2045, with diesel and gasoil consumption expected to reach about 30.1 million barrels per day, underscoring oil’s continued relevance in the global energy mix.
He noted that Nigeria’s oil industry has undergone a major structural shift, with indigenous companies now controlling about 55 per cent of total oil production following divestments by international oil companies from onshore and shallow-water assets.
Since the passage of the PIA, he said, over $6 billion worth of oil and gas assets have been acquired by local firms, reshaping ownership and operational control in the sector.
Omontuemhen also said Nigeria’s refining capacity is being transformed, driven largely by the Dangote Refinery and the expansion of modular refineries. While these developments have reduced dependence on imported petroleum products, he noted that domestic crude supply remains a challenge, with a significant portion of feedstock still sourced from overseas.
He identified deepwater projects as a key growth driver, noting that offshore fields offer higher production potential and lower exposure to security risks. Projects such as Bonga North, Preowei and Owowo are expected to boost output, supported by improved fiscal terms and renewed investor confidence.
Despite these opportunities, he warned that oil theft, vandalism, ageing infrastructure and underinvestment continue to constrain production. He also cautioned that global market volatility could push oil prices down to around $61 per barrel in 2026, posing fiscal risks for Nigeria.
He further noted that although Nigeria holds about 33 per cent of Africa’s gas reserves, the country has attracted only a small share of global oil and gas investment in recent years, highlighting the need for sustained reforms, improved security and better infrastructure.
Looking ahead, Omontuemhen said the 2026 outlook remains cautiously optimistic, with output projected to recover to between 1.8 and 2.0 million bpd as security improves, investments rise and regulatory reforms gain traction.
He concluded that while the sector still faces structural and operational challenges, ongoing reforms, rising indigenous participation and renewed investment interest provide a foundation for gradual recovery, stressing that policy consistency and infrastructure development will be critical to unlocking long-term growth.
