$16 Billion Post-PIA Investments Signal Gradual Recovery in Nigeria’s Oil Sector
Nigeria’s oil and gas industry is steadily regaining momentum despite ongoing production and security hurdles. This positive shift stems from key regulatory reforms, increased participation by indigenous operators, and renewed investor confidence.
Presenting at the recent Lagos Chamber of Commerce and Industry (LCCI) 2026 Economic Review and Outlook Conference, Pedro Omontuemhen, Partner and Clients & Market Leader at PwC Nigeria, highlighted these developments under the theme “Oil and Gas Sector Performance and Outlook – Trends, Challenges and Prospects in Nigeria’s Oil and Gas Industry.”
Nigeria’s average crude oil production reached approximately 1.64 million barrels per day in 2025 (based on official data for the first 11 months), marking an improvement from prior years but remaining below the nation’s potential of over 2 million barrels per day. The gap persists due to persistent oil theft, aging infrastructure, operational inefficiencies, and historical underinvestment.
The Petroleum Industry Act (PIA), combined with supportive executive orders, has attracted over $16 billion in new investments since its enactment. These reforms have enhanced fiscal transparency, bolstered regulatory frameworks, and promoted greater involvement from local players. Indigenous companies now control about 55% of total oil production, following divestments by international oil companies from onshore and shallow-water assets, with local firms acquiring more than $6 billion in assets post-PIA.
The sector’s economic contribution showed modest stability, contributing 3.44% to Nigeria’s GDP in Q3 2025, up slightly from 3.38% in the same period of 2024. This marginal increase reflects firmer global oil prices, enhanced security in select areas, and stronger output from indigenous operators.
Refining capacity is also evolving, led by the Dangote Refinery and modular facilities, reducing reliance on imported petroleum products—though challenges remain in securing sufficient domestic crude feedstock.
Deepwater projects, such as Bonga North, Preowei, and Owowo, represent key growth drivers, benefiting from lower security risks, improved fiscal terms, and rising investor interest.
Global demand for petroleum products, particularly diesel and gasoil, is projected to remain robust through 2045, reaching around 30.1 million barrels per day, affirming oil’s enduring role in the energy mix amid the transition.
Challenges persist, including oil theft, pipeline vandalism, aging assets, and potential oil price volatility (with forecasts around $61 per barrel in 2026), which could impact fiscal revenues. Nigeria, holding 33% of Africa’s gas reserves, continues to attract a limited share of global investments, underscoring the need for sustained security improvements, infrastructure upgrades, and policy consistency.
The 2026 outlook is cautiously optimistic, with production expected to rise toward 1.8–2.0 million barrels per day as reforms deepen, security strengthens, and investments flow.
Overall, while structural constraints remain, the combination of PIA-driven reforms, indigenous empowerment, and fresh capital inflows lays a solid foundation for sustained recovery and long-term growth in Nigeria’s vital oil and gas sector.
