Nigeria’s Upstream Reset: Growth

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OPINION

Strategic investment, infrastructure upgrades, and fiscal reform converge as Nigeria repositions itself as a high-growth upstream energy market.

Article by Arno Saffran, Wednesday 16 July, 2025

As Nigeria targets two million barrels per day (bpd) of oil production by 2026, it is positioning itself to reassert leadership in Africa’s energy landscape. Recent developments — including new infrastructure, renewed capital investment by international majors, and thoughtful fiscal policy reform — suggest a market quietly regaining the confidence of global operators.

For energy companies, service providers, and investors alike, Nigeria is showing signs of a more stable, investable upstream sector. The focus now is on identifying where strategic entry points align with long-term revenue potential and local execution strength.

Indigenous Capacity Strengthens: Otakikpo Terminal Comes Online

The commissioning of Green Energy International Limited’s (GEIL) onshore export terminal at Otakikpo marks an important milestone for Nigeria’s domestic energy infrastructure. With an initial capacity of 750,000 barrels and future scalability, the terminal will support evacuation for up to 40 marginal fields and reduce transportation costs by an estimated 40%.

Why this matters:

• It reflects a growing role for indigenous-led infrastructure, with export solutions tailored to local field development challenges.

• It increases operational reliability and cost-efficiency, both crucial for smaller field operators.

• It creates **demand for experienced commercial and technical professionals** in pipeline operations, terminal logistics, and field coordination.

Renewed Confidence from Majors: ExxonMobil and Shell Signal Long-Term Intent

Multinational operators are returning to Nigeria with sizeable commitments. ExxonMobil’s $1.5 billion plan to revitalise the Usan deepwater field and Shell’s increased stake in OML 118 both reinforce a shared view: Nigeria remains a key component of global portfolio strategies, especially in deepwater production.

Key takeaways:

• These investments are not speculative. They are based on existing infrastructure and known reserves, where efficiency and upside can be unlocked.

• Shell’s 67.5% stake in OML 118 supports its global liquids production growth plan through 2030.

• Roles in field development, subsea planning, FPSO operations, and partner engagement will likely expand as these projects progress.

Regulatory Stability: New Executive Order Brings Cost Clarity

In April 2025, the Nigerian government introduced the Upstream Petroleum Operations Cost Efficiency Incentives Order, offering tax credits of up to 20% for operators who meet performance-linked cost-efficiency benchmarks.

Implications:

• It provides greater clarity and predictability for financial modeling and investment approval processes.

• It promotes accountability and improved cost governance — key concerns for both investors and operators.

• Commercial and finance leaders will need to work closely with technical teams to ensure compliance and optimise capital structures accordingly.

Long-Term Vision: Nigeria–Morocco Gas Pipeline Advances

The 5,600 km Nigeria–Morocco Gas Pipeline project continues to progress. Engineering studies are complete, a governance vehicle is in place, and participating countries are aligned on the development pathway. Funding commitments from global and regional institutions underscore long-term confidence.

Strategic view:

• This project is less about immediate return and more about geopolitical energy integration.

• It offers a future platform for cross-border gas trade, industrial development, and regional cooperation.

• Companies involved in midstream gas, long-term offtake planning, and infrastructure project development should monitor this closely.

Outlook: Practical Optimism in a Complex Market

Nigeria remains a complex operating environment, but the fundamentals are shifting in a positive direction. Indigenous capacity is growing, international players are recommitting, and the regulatory environment is maturing.

For stakeholders across the energy value chain, the current cycle is less about high-risk speculation and more about disciplined positioning. The focus now is on:

• Partnering with credible local operators and established multinationals.

• Aligning with regulatory expectations and fiscal frameworks.

• Building long-term human capital and delivery capability across upstream, midstream, and supporting services.