Rising Costs Cast Shadow Over Nigeria’s 2026 Oil Output Ambitions

BY GBOGBOWA GBOWA

Despite setting an ambitious target of 2.5 million barrels per day by 2026, Nigeria’s oil sector faces mounting concerns over cost-related barriers that could dampen investor enthusiasm, industry leaders warn.

At the 4th Petroleum and Natural Gas Seniro Staff Association of Nigeria (PENGASSAN) and Labour Summit (PEALS 2025) held in Abuja, Nigerian Upstream Petroleum Regulatory Commission (NUPRC) Chief Executive, Mr. Gbenga Komolafe, expressed optimism about the country’s production trajectory. He cited recent gains—an increase from 1.46 million barrels per day in October 2024 to 1.8 million barrels—as evidence of progress.

Komolafe credited Presidential Executive Orders under the Petroleum Industry Act (PIA) 2021 for streamlining contracting cycles and reducing investment risks. He also highlighted efforts in deepwater exploration, reactivation of dormant fields, and enhanced recovery techniques, including a cluster development strategy aimed at cost reduction and infrastructure sharing.

However, industry insiders remain cautious. Speaking at the summit, ExxonMobil Managing Director Mr. Jagie Baxi underscored a critical challenge: Nigeria’s high drilling and operational costs are discouraging new investment, especially in deepwater operations where natural production declines by up to 15% annually.

Baxi emphasized that while Nigeria boasts vast hydrocarbon reserves, the cost-to-reward ratio remains unfavorable. Without risk-adjusted incentives and stronger collaboration to resolve disputes and revive underperforming fields, investor confidence may continue to erode.

The NUPRC’s sustainability goals—including eliminating routine gas flaring by 2030 and cutting methane emissions by 60% by 2031—were also discussed. Yet, stakeholders agree that unless cost structures are addressed, these long-term ambitions may struggle to attract the capital needed to bring them to life.

While the official keynote address by NUPRC Chief Executive Gbenga Komolafe focused heavily on production targets, cost reduction strategies, and sustainability goals, security issues formed the broader part of discussions at the summit.

PENGASSAN President, Comrade Festus Osifo speaking on the theme “Building a Resilient Oil and Gas Sector” referenced asset protection as a pillar of resilience, like crude oil theft and energy security. These were framed as critical challenges impacting both the workforce and national revenue, reinforcing the need for stronger safeguards and collaborative enforcement strategies.