Nigeria’s Oil Industry Growth Requires Sustainable Fiscal Reforms

Nigeria’s oil and gas industry continues to face major challenges that are slowing growth and reducing productivity. Industry analysts blame insecurity, infrastructure deficits and policy uncertainty for the sector’s weak performance.

Rising geopolitical tensions in the Middle East, including renewed attacks on oil facilities linked to Iran and the United Arab Emirates’ planned exit from OPEC, have also raised concerns about global supply disruptions and their impact on Nigeria and other African producers.

Sahara Group Co-founder, Tonye Cole, said Nigeria and other African oil-producing countries must stop treating oil price increases as temporary gains and instead build long-term capacity to respond to global supply shocks.

Speaking in an interview with CNBC Africa, Cole said Nigeria has the potential to help stabilise global oil supply if it can increase production quickly and consistently. He noted that the country’s production remains around 1.4 million to 1.5 million barrels per day, far below the nearly 2 million barrels per day recorded about two decades ago.

According to him, years of militancy, insecurity and underinvestment in the Niger Delta have weakened Nigeria’s production capacity. He also described the Petroleum Industry Act as an important reform but said delays in its implementation reduced its impact.

Cole urged the government to maintain policy consistency, strengthen the rule of law, and avoid regulatory reversals to attract investment into the sector.

He warned against distributing oil windfalls directly to consumers, saying such measures could worsen inflationary pressures.

Instead, he advised the government to focus on food and transport policies to ease inflation and improve economic stability.

Cole also called for stronger regional cooperation among African oil producers through frameworks such as the African Continental Free Trade Area. He said African countries should negotiate and plan collectively to improve energy security and retain capital and technical expertise within the continent.

He stressed the need for greater indigenous participation in upstream oil and gas operations, noting that local companies now contribute about 27 per cent of Nigeria’s oil production, up from 12 per cent a decade ago.

Industry experts say financing, high operating costs and ageing oil fields remain major obstacles to growth. They added that improved security, faster project approvals and sustained fiscal reforms are critical to boosting investment and helping Nigeria achieve its long-term production targets.