Nigeria’s oil and gas sector is navigating a major tax overhaul, increased domestic refining stability, and ambitious production targets despite global market headwinds.
Refining and Domestic Supply
Dangote Refinery Maintenance: The 650,000-bpd Dangote refinery confirmed that its gasoline unit is undergoing 50 days of planned maintenance (begun Dec 8, 2025) with a scheduled restart for January 26, 2026. Despite this, the refinery maintains steady fuel output of 40–50 million liters of gasoline daily from existing stocks.
Downstream Policy Shifts: The Crude Oil Refinery Owners Association of Nigeria (CORAN) has called for clearer “policy differentiation” to protect local refiners against importers as the sector faces defining choices in 2026.
Fiscal and Regulatory Developments
New Fuel Taxes: Effective January 1, 2026, the federal government introduced a 5% surcharge on petrol, diesel, and aviation fuel consumption under the new Tax Administration Act. This equates to approximately ₦500 tax for every ₦10,000 spent.
Regulatory Board Appointments: President Tinubu has nominated new board members for the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), seeking urgent Senate confirmation.
2026 Budget Targets: The federal government has set a production target of 2.06 million barrels per day (bpd) and a benchmark oil price of $64 for the 2026 budget. However, some analysts view the 1.8 million bpd mark as a more realistic expectation.
Production and Investment
Output Recovery: Nigeria’s daily crude output has climbed to between 1.7 million and 1.83 million barrels as of early 2026, supported by “Project One Million Barrels” and increased rig activity.
Asset Sales and Divestments: NNPC Ltd is reportedly eyeing the sale of certain oil and gas assets. In the private sector, Heirs Energies became the largest shareholder in Seplat Energy after acquiring Maurel & Prom’s 20.07% stake for approximately $500 million.
Infrastructure Growth: The 614km Ajaokuta-Kaduna-Kano (AKK) Pipeline is slated for commissioning in 2026, which is expected to reduce industrial costs in northern Nigeria by 40%.
Global Market Pressures
Increased Competition: Nigerian crude is facing stiff competition in early 2026 from Latin American (Brazil, Guyana) and US supplies, which are currently favored by European refiners due to proximity and competitive pricing.
Price Volatility: Analysts predict a bearish outlook for global oil prices in 2026, with some forecasts (like J.P. Morgan) seeing Brent as low as $58/bbl due to ample supply.
Note by Alessandro Bazzoni