Commercial Bottlenecks, Weak Metering Tie Down Nigeria’s Crude Deliverables

Nigeria’s upstream oil and gas sector has witnessed a remarkable resurgence in recent years, attracting more than $10 billion in fresh investments and recording steady improvements in crude oil production. The recovery has been largely driven by the implementation of the Petroleum Industry Act (PIA), regulatory reforms, and stronger efforts to curb oil theft and pipeline vandalism.

According to data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigeria’s crude oil production rose to 1.53 million barrels per day (bpd) in May, the highest level in 15 months and slightly above its OPEC+ production quota of 1.5 million bpd. Combined with condensate production of 170,446 bpd, total hydrocarbon output reached about 1.7 million bpd, an 11-month high.

The improvement follows years of production shortfalls caused by sabotage, crude theft, operational disruptions, and force majeure declarations on key export streams. Authorities are now targeting additional output growth, with the Nigerian National Petroleum Company (NNPC) projecting production of 2 million bpd within the next two years.

Major investments have supported the sector’s recovery, including the $5 billion Bonga North deepwater project and the $500 million Ubeta Gas Project led by TotalEnergies. Government approvals of indigenous asset acquisitions worth over $5 billion have also strengthened local participation in the industry.

Despite these gains, industry experts warn that significant structural challenges continue to undermine Nigeria’s crude oil deliverables. Weak metering systems, inadequate hydrocarbon accounting, and persistent commercial and institutional bottlenecks remain major obstacles to sustained production growth.

Energy analyst and Dairy Hills Managing Partner, Kelvin Emmanuel, said Nigeria still lacks a reliable system for measuring crude production from wellheads to export terminals. According to him, the absence of transparent end-to-end accounting limits investor confidence and makes it difficult to accurately track production volumes and revenue flows.

Emmanuel also argued that Nigeria’s fiscal and commercial terms remain less competitive than those offered by emerging producers such as Guyana. While recent licensing rounds may attract investor interest, he noted that long-term capital inflows will depend on improvements in transparency, security, metering infrastructure, and regulatory certainty.

Although government officials continue to project ambitious production targets of up to 2.5 million bpd, Emmanuel believes a more realistic increase would be between 300,000 and 400,000 bpd over the next few years if ongoing projects are successfully executed.

Analysts maintain that while Nigeria possesses strong geological potential and attractive crude grades, lasting growth will depend on resolving longstanding governance, measurement, and operational challenges that continue to constrain the sector.