Nigeria’s oil sector is experiencing a remarkable resurgence, with Renaissance Capital projecting that production could surge past two million barrels per day by 2026, marking a significant recovery from years of decline. The optimistic forecast comes as stable policy implementation, increased investment, and the transformative impact of the Petroleum Industry Act (PIA) begin to reshape Africa’s largest crude producer.
The country’s oil output has struggled since its 2005 peak of 2.4 million barrels per day, plummeting from 1.74 million barrels per day in 2019 to just 1.14 million in 2022 due to underinvestment, security challenges, and the COVID-19 pandemic. However, upstream investment is now regaining momentum, with active rig counts rising from the low 30s in early 2024 to around 40 by September 2025, levels not seen in years.
“The trajectory of rig activity signals that the building blocks for growth are being put in place,” Renaissance Capital analysts stated. “If maintained, this upward trend provides a credible pathway for Nigeria to meet or even exceed medium-term production targets.”
The PIA, which consolidated Nigeria’s fragmented legal framework into a transparent and competitive regime, has been instrumental in restoring confidence. The legislation introduced tax incentives, reduced bureaucratic bottlenecks, and created independent regulators to oversee operations. According to the report, the Act lowers effective tax rates and protects investors from retroactive fiscal changes, enhancing predictability and boosting Nigeria’s attractiveness relative to African peers.
The ongoing divestment of onshore assets by international oil companies has allowed indigenous producers to take a larger role in upstream activities. This shift, combined with investments in infrastructure such as the Dangote Refinery and major gas pipelines, is fundamentally reshaping the sector. Key policy directives implemented in 2024 and 2025 include faster project approval cycles, tax holidays for gas infrastructure, and cost-efficiency incentives to reward low-cost producers.
Nigeria’s light, sweet crude remains in high demand globally, and the commissioning of the Dangote Refinery, supported by the Domestic Crude Supply Obligation, is expected to sharply reduce refined fuel imports and improve foreign exchange stability. Renaissance Capital projects that with stable policy implementation, the production increase will help stabilize fiscal revenues and strengthen Nigeria’s foreign exchange buffers.
The outlook for Nigeria’s oil and gas sector remains broadly positive, with structural reforms, rising local participation, and expanding midstream capacity creating the foundation for a more balanced and investable industry. As of July 2025, Nigeria’s crude production averaged 1.71 million barrels per day, and industry observers believe the momentum is building for sustained growth.
Source: nairametrics.com