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By Adewale Sanyaolu
Nigeria’s energy sector heads into 2026 under intense scrutiny, with high expectations and little room for error and excuses. Beyond policy rhetoric, the focus is squarely on delivery, where regulators and players are expected to clearly convert licensing rounds into barrels; gas reserves into reliable power and refining capacity into stable fuel supply.
Persistent issues such as insecurity, weak market liquidity, regulatory predictability and infrastructure bottlenecks will test the resilience of recent reforms.
With government revenue, investor confidence and economic stability closely tied to energy and budget performance, how effectively these challenges are managed will ultimately define Nigeria’s energy landscape in 2026.
There are key projections as contained in the 2026 budget themed: “Budget of Consolidation, Renewed Resilience and Shared Prosperity,”.
It features a total projected expenditure of N58.18 trillion and is anchored on economic assumptions to drive growth, with a crude oil benchmark of $64.85 per barrel and daily oil production of 1.84 million barrels per day (mbpd).
How well these 2026 budget projections will perform depends largely on the success of the oil and gas sector.
In its energy outlook for 2026, exclusively obtained by Daily Sun, energy policy analyst and partner, Bloomfield Law Practice, Mr. Ayodele Oni, disclosed that Nigeria’s energy sector in 2026 will be shaped less by new policy statements and more by whether the sector can resolve a set of execution issues that flowed directly from 2025.
These issues, according to him, span upstream, gas, downstream, power and the commercial and regulatory conditions that determine whether projects become financeable and deliverable.
Upstream execution
Oni explained that a primary issue for 2026 is whether licensing bid commencement and the re-circulation of discovered-but-undeveloped and long-fallow assets translate into funded work programmes, development drilling and sustained production.
“The risk is that assets remain ‘paper value’ due to slow approvals, weak economics, or operators whose technical and financial capacity is not matched to the obligations of the acreage.”
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), on December 1, 2025, announced the official commencement of Nigeria’s 2025 oil licensing round with the opening of the portal for prospective investors to bid, with an assurance of transparency in the process.
With Presidential approval, the NUPRC placed 50 oil and gas blocks on offer across onshore, swamp/shallow water, frontier basins, and deepwater terrain.
A breakdown of the blocks includes 15 onshore blocks, 19 shallow water blocks, 15 frontier assets and one deepwater block.
The Commission outlined the key objectives of the 2025 Licensing Round, which include boosting Nigeria’s reserves, increasing production capacity, expanding gas utilisation, creating thousands of jobs across the value chain, enhancing indigenous participation, and reinforcing Nigeria’s commitment to transparency in line with EITI principles.
The 2025 Licensing Round is projected to attract about $10 billion in investments, add up to two billion barrels to national oil reserves over the next decade, and deliver an estimated 400,000 barrels per day from fully developed assets.
Security and production continuity
The energy analyst added that Nigeria’s upstream performance remains materially exposed to insecurity, vandalism, crude theft, and disruption to evacuation routes.
“In 2026, the issue is whether continuity can be sustained over time, because even modest, durable improvements in security and asset integrity can unlock disproportionate gains in output and investor confidence.”
Post-transaction governance and delivery
According to him, a major spillover from 2025 is that the market focus in 2026 shifts from “who acquired what” to whether new owners can deliver responsibly and at scale.
Examples, he said, include the growing role of indigenous and Nigerian capital in strategic assets and platforms, such as Heirs Energies’ larger participation in the upstream space (Seplat), the transition in control at Geregu Power (through MA’AM Energy’s acquisition of the controlling structure), and continued expansion by indigenous operators such as Aradel, ND Western, amongst others.
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The core issue, he maintained, is whether these ownership shifts are matched by capital discipline, technical depth, strong HSE culture, credible community engagement (HCD), and transparent governance, with performance judged by stable production, reinvestment, and operational reliability rather than transaction headlines.
Gas monetisation/market liquidity
Oni reminded that gas remains Nigeria’s most strategic lever, but the issue in 2026 is bankability.
He stressed that domestic gas supply and gas-to-power continue to be constrained where market liquidity is weak, payment discipline is poor, and credit enhancement is insufficient.
He warned that if these constraints persist, producers will remain cautious even where demand exists, and the broader “Gas Decade” ambition will under-deliver relative to potential, especially with the gas flare commercialisation licences granted in late December 2025.
Flaring, methane, emissions performance
The energy policy advocate highlighted that emissions management is no longer merely a compliance topic.
In 2026, he stressed that flaring reduction and methane performance will increasingly be treated as commercial issues: lost revenue, higher project risk, and weaker access to competitively priced capital.
“The practical issue is whether Nigeria can scale associated-gas utilisation and improve credible measurement, reporting and verification across the value chain in a way financiers and offtakers can rely on.”
Downstream reliability/price stability
Oni reiterated that while the Dangote Refinery is a structural milestone, a central issue for 2026 is whether operational stability, feedstock consistency, logistics, storage and distribution capacity translate into predictable product availability and reduced vulnerability to supply shocks.
He maintained that the risk is that disruptions or bottlenecks in any part of the supply chain keep import dependence and FX exposure higher than expected, with knock-on effects on inflation and market confidence.
Power market fundamentals
Electricity outcomes in 2026, according to Oni, will still be judged by reliability and access, with more states/regions (as seen with Kano, Katsina, and Jigawa) domesticating, developing and scaling their electricity markets.
The core issues remain liquidity (who pays and how consistently), metering depth, and transmission and distribution constraints. Reform direction is important, but without tangible improvements in collections, metering rollout, grid stability and the investability of offtake, new generation and embedded solutions remain harder to finance at scale.
Policy certainty/regulatory trajectory
A defining issue for 2026 is regulatory predictability. Beyond implementation of existing frameworks, the sector is also contending with reform spillovers and ongoing debates about amendments and refinements to the PIA and related instruments.
The practical concern for investors and operators is whether the policy environment provides stable fiscal and operating assumptions over project life cycles, or whether frequent adjustments introduce uncertainty that delays investment decisions.
Renewables delivery constraints
For renewables and distributed energy, the issue in 2026 is delivery rather than ambition. Projects will advance where they can overcome persistent blockers: grid access, creditworthy offtake, FX/convertibility concerns, and permitting and right-of-way constraints.
As a result, private offtake structures and captive power arrangements may continue to outpace utility-led rollout where grid and liquidity constraints remain binding.
In summary, he maintained that Nigeria’s 2026 energy story is likely to be shaped by execution: turning 2025’s licensing bid round commencement and asset shifts into production, unlocking gas monetisation through liquidity and credit improvements, stabilising downstream supply chains (including reliable refining outcomes), improving power market fundamentals, and maintaining policy certainty that supports long-term capital.
