Renaissance Capital projects that with stable policy implementation, production could return to over two million barrels per day by 2026, helping to stabilize fiscal revenues and strengthen Nigeria’s foreign exchange buffers.
This growth, according to a report by the company, is to be driven by the implementation of the Petroleum Industry Act (PIA), renewed investments, and a gradual rebalancing of ownership between international and indigenous operators.
The report shows how policy reforms, increased capital expenditure, and the rise in active rig counts have collectively reignited confidence in the sector, positioning Nigeria for sustainable medium-term recovery.
“The trajectory of rig activity signals that the building blocks for growth are being put in place,” Renaissance Capital analysts wrote. “If maintained, this upward trend provides a credible pathway for Nigeria to meet or even exceed medium-term production targets.”
Reforms and renewed investment momentum
Oil production in Nigeria has struggled since its 2005 peak of 2.4 million barrels per day, with declines exacerbated by underinvestment, security issues, and the COVID-19 pandemic. Output fell from 1.74 million barrels per day in 2019 to just 1.14 million in 2022.
However, Renaissance Capital notes that upstream investment is regaining momentum. Active rig counts — a key indicator of exploration activity — rose from the low 30s in early 2024 to around 40 by September 2025, a level not seen in years.
This growth, the report states, is supported by the Petroleum Industry Act (PIA), which consolidated Nigeria’s fragmented legal framework into a transparent and competitive regime. The Act introduced tax incentives, reduced bureaucratic bottlenecks, and created independent regulators to oversee upstream and downstream operations.
“The PIA lowers effective tax rates and protects investors from retroactive fiscal changes,” the report noted. “This enhances predictability and boosts Nigeria’s attractiveness relative to its African peers.”
Local ownership, gas transition, and fiscal reforms
According to Renaissance Capital, the ongoing divestment of onshore assets by international oil companies (IOCs) has allowed indigenous producers to take a larger role in upstream activities. This shift, combined with investment in infrastructure such as the Dangote Refinery and major gas pipelines, is reshaping the sector.
The report highlights several key policy directives implemented in 2024–2025, including 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, 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, production could return to over two million barrels per day by 2026, helping to stabilize fiscal revenues and strengthen Nigeria’s foreign exchange buffers.
What lies ahead
While global oil prices are expected to moderate, Nigeria’s renewed focus on gas development, improved operational efficiency, and stronger regulatory oversight provide a pathway for resilience.
“The outlook for Nigeria’s oil and gas sector remains broadly positive,” Renaissance Capital stated. “Structural reforms, rising local participation, and expanding midstream capacity are creating the foundation for a more balanced and investable industry.”
What you should know
Nairametrics recently reported that the Nigerian Oil and Gas sector surged more than 5% in early October, putting it within reach of breaking through the 2,700-point resistance level.
Tracked by the NGX Oil/Gas Index, the sector opened the month at 2,523.1 points and climbed to 2,664.0 points as of October 8, 2025, sustained by Aradel, Seplat, and Eterna.
This marks a steady recovery from a prolonged downtrend that began after the index hit a high of 2,712 points in December 2024.
