By Elijah Olusegun
WorldStage Nigeria’s Microeconomic Outlook 2026– Demand and Trade Dynamics: The oil and gas sector in Nigeria is re-entering a growth stage, at 6.6 percent by year end. That expectation resonates with most other sectors riding on the positive macroeconomic impacts coming from the current administration’s reforms.
Crude oil will remain the dominant export driver in 2026. Just like it did last year when it accounted for 56.1 percent of total exports (₦12.81 trillion of ₦22.81 trillion) in Q3.
Helping it to maintain the lead are the global oil demand which will rise by 860,000 barrels per day in 2026, and Brent prices stabilizing at $55/barrel. As it follows, Nigeria’s export earnings will likely grow, widening the trade surplus and strengthening reserves and possibly naira.
Locally, demand for refined products will also remain high this year. Rising local refinery output will reduce importation. Gas consumption will also grow on the back of power generation and industrial expansion.
And the factors determining the sector’s growth are many: the increase in production targets for oil and gas, upstream and downstream; the increase in investment in infrastructure, mainly local refineries by private capital. Others factors include government investment push through the Nigerian National Petroleum Company Limited (NNPCL’s) divestment of its assets in international oil companies (IOCs) and other JVs to raise funds; and government policy on gas to power.
In that wise, Nigeria’s oil production might reach 2 million barrels per day in 2026, with a growth rate of 21.7% from 2025. On the other hand, gas production, analysts predict, will reach 10 billion standard cubic feet per day (bcfpds) by 2027, and 12 bcfpds by 2030.
It therefore makes sense that Nigeria will be investing heavily in gas infrastructure to enhance distribution, and increase its gas processing capacities. Several projects are already underway, including the Ajaokuta-Kaduna-Kano pipeline and the OB3 pipeline.
Upstream
Nigeria’s production targets will be banking on improved security in the Niger Delta and the reactivation of dormant fields to shore up the volume.
The number of oil rigs has increased from just eight in 2021 to 69 last October. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is motivated that more will be added. No fewer than 50 new oil blocks have been launched for bidding since early 2026: 19 shallow-water blocks; 15 on-shore blocks; 15 frontier blocks; and one deep-water block.
The Petroleum Industry Act (PIA) will also roar fully. Its provisions will enhance participation locally, and ensure investors’ greater confidence. Better understanding of the Act will also foster more cooperation between the IOCs and the NNPCL, the NUPRC and others.
Considering all these possibilities, the government hopes to attract $10 billion in investment upstream. Analysts insist opportunities abound more there, especially in deep-water developments.
Upstream, gas presents its own potential for the sector’s growth. The Nigerian Gas Master Plan (NGMP) 2026 will attract investments that will drive this.
Downstream
Downstream, Nigeria seeks self-sufficiency. The goal is to move the nation away from depending on oil importation to becoming a net exporter.
Private refineries will dominate this initiative. The four state-owned companies might be in the news again. More so if the government eventually sells them.
Dangote Group has led the way here, being one of the world’s biggest refineries with its 650,000 bpds Lagos plant. The framework to double its capacity has been sealed.
At current capacity, it can supply 75 million litres of petrol, 25 million litres of diesel, and 20 million litres of jet fuel daily. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) data reveals that Nigerians consume up to 57 million litres daily.
Other players to watch in the industry in 2026 are modular refiners. More have secured licenses from the NMDPRA. Waltersmith in Imo, Aradel in the Niger Delta, and Edo Refinery and Petrochemical Company—all will square it out to contribute 10% of the total production expected of the modular refineries.
The shift away from import dependence will also affect local consumption. Attention will move from oil to gas, LPG, and CNG—their consumption, better management as in gas flaring reduction, industrialization, and exportation.
And the policy driving all these—the NGMP—will focus more on execution in 2026. That means greater exploration of the 210 trillion cubic feet of Nigeria’s proven gas reserves.
According to projections, the exploration will unlock $60 billion investments in infrastructure.
Investment and Funding
Investment in Nigeria’s oil and gas sector will rise in 2026, for obvious reasons. Major players have already made multiple investment decisions. Chevron planned to increase drilling and participate in new license auctions. Shell also committed $5 billion to the Bonga North deepwater project and $20 billion investment in the Bonga South West deepwater oil project. And ExxonMobil too, invested $1.5 billion in Usan and other fields.
For gas, Afreximbank has committed $500 million to financing LNG and pipeline infrastructure. The NNPCL’s and Heirs Energies agreed to convert flared gas into energy. All these will accelerate commercialisation and midstream growth in 2026.
Other key investments include $22 billion required for the NGMP gas pipeline projects to enhance gas distribution and export capacity; and $18.2 billion invested in 28 new field development plans will produce 1.4 billion barrels of oil. There are also the $10 billion targeted investment through the 2026 oil and gas licensing round; and the $1.5 billion investment by Green Energy International Limited (GEIL) in revitalizing the Usan deepwater oilfield
Pursuing its own revenue generation and investment drive, and the industry’s liberalization, which the exit of oil multinationals necessitates, the NNPCL has also embarked on major divestments.
Most of its stakes and portfolios—up to 35 percent—in Shell, Eni, Chevron, TotalEnergies, and other joint ventures (JVs) may go on offer in 2026.
Same likely for the four state-owned refineries. A number of Chinese firms have indicated interest.
The NNPCL planned to raise $30 billion through these asset sales by 2030. Its investments in gas and other infrastructure need all the revenues it can generate.
Government Reforms
Apart from the PIA, the government in 2025 introduced several reforms aimed at strengthening the oil and gas sector. One of them is the streamlined regulatory oversight under the NUPRC and the NMDPRA. Combined, they have unlocked more than $18 billion in field development plans.
They also approved the settlement of gas debts to producers to restore confidence and improve domestic gas supply for power generation.
NUPRC has reduced signature bonuses for the licensing round to attract more investors.
There are tax credits, reduced bureaucracy, and other incentives to attract investments in the oil and gas sector. The Local Content Requirements, in particular, will ensure domestic participation in the industry.
To further ease participation, the government will focus on technology adoption, especially for efficiency and monitoring. Regulators and operators will be pushing for digital transformation to meet production targets and ESG demands.
TakeawayIn the growth phase Nigeria’s oil and gas entered in 2026, opportunities abound for private investors. They can take position on the opportunities the exit of OICs creates; they can seize the ones in the NNPCL selling off its stakes in those multinationals; and they can explore the government shift to self-sufficiency in oil and gas.
*Extract from WorldStage Nigeria’s Microeconomic Outlook 2026.
