Emmanuel OchayiAfter a remarkable 170% gain in 2024, Nigeria’s Oil & Gas sector is now the worst-performing index on the Nigerian Exchange Limited (NGX). As of March 21, 2025, the NGX Oil & Gas Index has dropped by 7.82% year-to-date (YTD), surpassing the declines in other struggling indices. Investor confidence has weakened due to delayed dividend payments, weak financial results, and global economic factors. The sector, which was once a market leader, is now facing a severe downturn.
Declining Stock Prices and Investor Sentiment
Stock prices of several oil & gas companies have plunged in 2025. Of the seven listed companies in the sector, only Eterna Plc has recorded gains, rising by 56.4% YTD. Other major players have suffered sharp losses. Oando Plc has seen a 22.7% decline, while MRS Oil Nigeria Plc has dropped by 25.6%. Conoil Plc, Aradel Holdings, and TotalEnergies have also recorded significant losses. The selloff reflects growing investor concerns about the sector’s future profitability.
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Delayed Dividend Payments Frustrate Investors
One of the biggest reasons for the poor performance of Nigeria’s oil & gas stocks is the delay in dividend payouts. Investors are wary of whether the sector can deliver strong returns. Oando Plc’s dividend strategy has been a key issue. The company announced a bonus share issuance over three years instead of the usual 90-day payout. This decision has frustrated shareholders, leading many to exit the stock.
Weak Financial Reports Raise Concerns
Unimpressive unaudited financial reports for 2024 have also contributed to the selloff. TotalEnergies, which played a key role in last year’s market rally, has failed to maintain momentum due to its underwhelming Q4 2024 earnings. Analysts argue that the sector’s poor performance is due to weak financials rather than broader industry conditions. Investors are now awaiting the audited results to assess whether the sector can regain stability.
Global Oil Prices and Policy Uncertainty
Beyond domestic challenges, global factors are also affecting Nigeria’s oil & gas stocks. Fluctuating global oil prices and uncertainty over U.S. energy policies under President Donald Trump have made investors cautious. According to analysts, these external factors have created additional volatility in the Nigerian oil market, discouraging investors from holding onto stocks.
Past Market Trends and Corrections
The oil & gas sector in Nigeria has a history of fluctuating performance. Before the historic 170% surge in 2024, the sector had experienced years of negative returns. In 2018, the index fell by 8.61%, followed by declines of 14.6% in 2019, 13.03% in 2020, and 8.73% in 2021. The current selloff appears to be a market correction after last year’s extraordinary gains.
Will the Sector Rebound?
Despite the current downturn, analysts believe there is a chance for recovery later in 2025. The upcoming 2024 audited results will be crucial in determining investor sentiment. If dividend payouts exceed expectations, the sector could regain momentum. Stability in global oil prices and clearer U.S. energy policies could also improve market confidence. For now, investors remain cautious, waiting for signs of a turnaround in Nigeria’s struggling oil & gas stocks.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
