Power
NESG report flags low investment in Nigeria's oil sector
A recent Nigerian Economic Summit Group report reveals that despite strong profits and stable output, petroleum companies are holding back on new investments.
Key points
- Real growth in crude petroleum and natural gas slowed to 2.6 per cent in the first half of 2026.
- Crude oil production averaged 1.63 million barrels per day during the same period.
- Poor electricity supply and economic uncertainty remain the primary deterrents to capital expenditure.
What happened
Nigeria's petroleum industry experienced a notable deceleration in economic growth during the initial six months of 2026, according to findings published by the Nigerian Economic Summit Group. Punch reported that real growth dropped to 2.6 per cent, marking a sharp decline from the 10.7 per cent expansion registered during the equivalent timeframe in 2025.
This slowdown occurred even as crude production remained relatively steady, averaging 1.63 million barrels per day through the first half of 2026. This output compares to 1.68 million barrels daily in the corresponding period of 2025 and 1.53 million barrels daily in 2024. Meanwhile, the composition of the nation's exports continued to evolve, with crude oil's share dropping to 52.9 per cent in early 2026, down from 71.4 per cent in 2024. Non-crude petroleum exports expanded correspondingly, reaching 32 per cent of total shipments, a shift partly attributed to the full operational capacity of the Dangote Petroleum Refinery.
Despite these shifts and favourable financial metrics—such as an Operating Profit Index of 119.3 and a Cash Flow Index of 130.5—companies have refrained from expanding their asset bases. The report's Investment Index fell to 92.7 in the first half of 2026, dropping below the neutral threshold of 100 as persistent electricity deficits and broader macroeconomic ambiguity discouraged new capital commitments.
Why it matters
The reluctance of petroleum firms to deploy capital into fresh projects poses a strategic challenge for Nigeria's energy sector. With fuel exports accounting for 85.9 per cent of total merchandise exports in 2025 according to World Bank figures, sustained underinvestment threatens long-term production capacity and value-chain expansion. Furthermore, infrastructural bottlenecks such as inadequate power supply—highlighted by a national electricity consumption level of 140.6 kWh per person in 2024—undermine the domestic processing ambitions critical for economic diversification and investor confidence across the region.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
Context from CEII
Grids decide whether generation becomes power that homes and businesses can rely on. Generation mix, transmission and distribution losses, and tariffs together shape reliability and the case for investment.
62.5% of people in Nigeria had electricity in 2024Countries in this story
Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
