Emmanuel OchayiNigeria’s oil sector has long struggled with declining production, theft, and underutilised refining capacity. The government has set an ambitious goal of increasing Nigeria’s oil production by one million barrels per day (bpd) by December 2026. While security measures against oil theft have reduced losses, experts argue that the key to long-term stability lies in local refining.
Despite being Africa’s largest crude oil producer, Nigeria still imports most of its refined petroleum products. This dependence on imports weakens the economy, increases fuel prices, and leaves the country vulnerable to global oil market shocks. Experts believe that investing in local refining will not only reduce reliance on imports but also strengthen domestic production, create jobs, and stabilise fuel supply.
Join our WhatsApp ChannelAccording to Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the government is committed to boosting oil production. “The government aims to increase production by 1 million BOPD by December 2026 under the Project 1 MMBOPD initiative, leveraging collaboration among operators, service providers, financiers, and host communities,” he said. However, industry analysts argue that without improving local refining, even increased production will not benefit Nigeria’s fuel economy.
READ ALSO: Why Nigeria’s Crude Oil Production Is Declining – And What Next
In this article, Prime Business Africa investigates how local refining can contribute to increasing Nigeria’s oil production and what solutions can drive the country’s energy sector forward.
1. Tackling Oil Theft and Pipeline Vandalism
Oil theft has been a major challenge for Nigeria’s oil industry, causing significant losses. The government’s crackdown has already led to a 5,000 bpd reduction in losses. However, stricter surveillance and increased security measures are needed. Deploying advanced monitoring technology and collaborating with local communities can help curb illegal activities.
According to Dr. Olumide Balogun, an energy security analyst, explains that “The key to tackling oil theft is integrating real-time monitoring systems with local intelligence networks. If host communities benefit from oil production, they will be more involved in protecting these assets.”
2. Strengthening Regulatory Certainty
Investors need clear policies to commit to long-term projects. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has assured stakeholders of investment-friendly policies. To boost Nigeria’s oil production, the government must ensure regulatory stability, transparency, and incentives that attract international oil companies (IOCs) and local investors.
George Amen, an oil and gas expert, emphasises “For Nigeria to attract long-term investments, the government must create a transparent regulatory framework. Clear tax policies, production-sharing agreements, and incentives for new investments will boost confidence.”
3. Expanding Offshore Oil Projects
Offshore oil exploration presents a huge opportunity for Nigeria. The approval of the Bonga North deep-water project by Shell’s Nigerian subsidiary signals confidence in offshore development. With peak production expected to reach 110,000 bpd, encouraging similar projects can significantly contribute to overall output growth.
Industry expert Engr. Chidi Okafor notes that “Deep-water exploration is Nigeria’s next frontier. The government should fast-track licensing rounds and provide fiscal incentives to attract investment in offshore projects.”
4. Fast-Tracking the Project 1 MMBOPD Initiative
The government’s Project 1 MMBOPD initiative aims to increase production through collaboration between operators, service providers, financiers, and host communities. Accelerating this project in 2025 with streamlined approvals, financial backing, and infrastructure development will push Nigeria closer to its production goals.
5. Boosting Natural Gas Production and Export
Nigeria’s oil production is closely linked to its natural gas sector. The country currently produces 7 billion standard cubic feet per day (SCFD) of natural gas. The recently signed Trans-Saharan Gas Pipeline deal with Algeria and Niger could enhance gas exports and support oil exploration by providing a reliable energy source for operations.
6. Encouraging Local Participation in the Oil Industry
Foreign oil majors have dominated Nigeria’s oil sector, but local companies are stepping up. Policies that empower indigenous firms through tax breaks, funding, and technical support can enhance oil production. A strong local presence also ensures job creation and economic benefits within the country.
7. Improving Oil Infrastructure and Logistics
Nigeria’s aging oil infrastructure needs urgent upgrades. Investment in modern storage facilities, pipeline networks, and refineries can reduce losses and improve efficiency. Public-private partnerships (PPPs) can drive infrastructure development, ensuring sustainable oil production growth.
Nigeria’s oil production can increase significantly in 2025 if these solutions are implemented effectively. Addressing security challenges, improving regulations, expanding offshore exploration, and supporting local companies are key steps. With a strategic approach, Nigeria can achieve its goal of adding 1 million bpd by 2026 and securing its position as Africa’s top oil producer.
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.
