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By Adewale Sanyaolu
With a few days to the end of 2025, watchers of Nigeria’s energy sector describe it as a year weighed down by missed production targets and unfulfilled reform promises.
Persistent structural challenges, policy gaps and operational setbacks combined to slow progress and dampen expectations in a year that was meant to deliver a decisive turnaround.
The sector, despite parading some of the best brains in the world operating in both public and private spheres, could not salvage the outcome of some of these policies, which has led to the exodus of some International Oil Companies (IOCs) to better operating climes.
The divestment of stakes by some of these oil firms has generated intense debate among experts. While some hail the divestment move as one of the best things that has happened to the sector, others argue that the gaps left by some of these IOCs were too big for indigenous oil companies to fill.
The exit of these IOCs may, however, be linked to the country’s failure to meet its set target of two million barrels per day (bpd) for 2025.
All efforts to raise the production bar from 1.5 million bpd at the start of the year to the projected levels failed to hit the target, as the country was only able to reach 1.8 million bpd at peak production.
On the transition to gas, the promise made by President Bola Tinubu to channel the gains of subsidy removal into cheaper sources of fuel, especially Compressed Natural Gas (CNG) for mass transit buses and privately owned cars, also fell short.
Other constraints that set the sector back in 2025 include challenges in the downstream sector, leading to constant disagreements among players over pricing and logistics, unavailability of crude oil to local refineries to boost refining capacity, and the failure of the Federal Government to bridge the electricity metering gap.
2m bpd production target missed
The Federal Government’s failure to meet its aspiration of hitting a two million bpd oil production target by December 2025 has led to reduced oil revenue for government coffers. Minister of State for Petroleum Resources, Mr. Heineken Lokpobiri, in an interview on the sidelines of the Oil Technology Conference (OTC) Africa Energy Forum (AEF) with the theme “Africa’s Energy Investment Drive Amid Global Transition to Green Minerals and Clean Energy” in Houston, Texas, said that while President Bola Tinubu gave the then NNPC management a mandate to grow oil production to two million barrels by this year, he further increased the target to 2.5 million bpd.
“When the new NNPC management visited me, I increased their oil production target to 2.5 million bpd from the initial two million barrels given to them by the President,” he stated.
Lokpobiri said he believed the target set by the President could be met and surpassed because, during the COVID-19 pandemic, when there were no new investments, oil production grew to 2.5 million bpd.
“The 2.5 million bpd oil production is easily realisable because all the bottlenecks against our oil production are being addressed.”
For over 10 years, he said, there was no new investment in the oil and gas sector, adding that the story has changed today as a result of the reforms of President Bola Tinubu.
However, production currently hovers between 1.6 million and 1.8 million bpd due to a number of factors, including oil theft, low investment, and inconsistency in government policies, which has forced some IOCs to safer investment destinations.
Local refiners in dire straits
One of the major news stories of 2025 is the threat to the existence of local refiners, particularly their inability to access feedstock for daily operations.
The setback is threatening the survival of investments, as they are currently producing far below their installed capacity of 27,000 bpd.
Daily Sun findings reveal that more than five Final Investment Decisions (FIDs) are currently in limbo, as investors tread cautiously amid concerns about the sustainability of crude supply agreements tied to the government’s naira-for-crude policy.
Some investors, who spoke to Daily Sun in separate interviews, said they are reassessing the inherent risks. They added that they are unclear about the Return on Investment (ROI) if they eventually stake their resources in the refinery business.
Their fears are accentuated by the fact that ROI on refineries is very marginal, and any miscalculation could be costly.
Regrettably, the flip-flop in the implementation of the naira-for-crude policy is a major disincentive to investment, as modular refineries have been edged out, leaving space for only big players.
Publicity Secretary of the Crude Oil Refiners Association of Nigeria (CORAN), Mr. Eche Idoko, said the majority of its members have been impacted by crude oil unavailability, forcing many to produce far below installed capacity.
He said only those with oil production fields, such as Waltersmith and Aradel, could be said to be producing close to full capacity. Even then, Aradel had to enter a third-party arrangement with Seplat Energy to supply part of what they need to produce at their full capacity of 11,000 bpd.
He added that the naira-for-crude initiative, which should have provided succor for modular refineries, hasn’t helped because the Federal Government has made it clear that the initiative is only for refineries producing Premium Motor Spirit (PMS), otherwise called petrol.
CNG policy wobbles
The Presidential Initiative on CNG (Pi-CNG), launched in 2023 to promote the adoption of CNG and electric vehicles—especially in mass transit systems—has been threatened by a low number of conversion centres and refueling stations.
Worse still, the Pi-CNG target of one million conversions by 2027 faces challenges due to limited infrastructure. Currently, there are 68 auto gas stations and 369 conversion centres, with 150 under construction and another 27 Mother Stations underway.
A recent report by Augusto & Co in its CNG Industry Report 2025 highlighted that infrastructure coverage is particularly limited in the northern and southeastern regions, where poor pipeline connectivity and high distribution costs impede market expansion. Additional constraints include high conversion costs, sparse refueling networks, low consumer awareness, and safety misconceptions. Exchange rate volatility further complicates pricing and investment, as feed gas is priced in dollars but paid for in naira.
15% import duty causes stir
The Federal Government’s decision to back down on a controversial 15% import tariff on petrol and diesel elicited mixed reactions. Civil society groups welcomed the suspension, while others criticized the government for backtracking.
Supporters saw it as a move to protect local refineries, while critics warned it could increase fuel prices. Mustapha Ahmed of the Nigerian Coalition of Civil Society Organisations (NCCSO) criticized the delay, saying it favored foreign importers at the expense of domestic refineries.
Electricity metering gap persists
The electricity metering gap remains a concern. As of October 2025, 5.3 million users were unmetered. NERC reported that 106,822 meters were installed in October, bringing the national metering rate to 56.07%. Aba Power, Eko DisCo, and Ikeja Electric showed significant improvements, while Enugu, Jos, Kaduna, Kano, and Yola DisCos lagged with rates below 50%.
NNPC, NUPRC, NMDPRA CEOs step aside
On April 2, 2025, President Tinubu sacked Mele Kyari and other NNPC board members, citing poor performance. Bashir Ojulari was appointed Group CEO. On December 17, 2025, the CEOs of NMDPRA and NUPRC resigned, with Oritsemeyiwa Amanorisewo Eyesan and Engineer Saidu Aliyu Mohammed nominated as their replacements.
Expectations for 2026
Going into 2026, PETROAN President Mr. Billy Gillis-Harry emphasized adequate funding for regulatory institutions, support for local refining, and increased domestic refining capacity to reduce import dependence and create jobs.
Mr. Muda Yusuf, CEO of CPPE, urged the petroleum leadership to prioritize domestic refining, fair competition, and investment in crude oil and gas production. He stated:
“In the downstream segment, strong and deliberate support for domestic refining must be an immediate and non-negotiable priority. Government policy should clearly favour locally refined petroleum products through targeted fiscal, regulatory and infrastructural support for both public and private refineries, while actively encouraging new investments in refining capacity.”
He further stressed ending the distortion where imported petroleum competes unfairly with locally refined products and maximizing hydrocarbon resources while the opportunity still exists.
“The NUPRC should prioritize production growth, investment facilitation, and improved security, with a clear national objective of raising crude oil output to a minimum of two million barrels per day. Expanded investment in gas production and compliance with domestic crude supply obligations to local refineries must also be central.”
