Nigeria’s oil industry is recording its strongest recovery in years, but the country’s refining ambitions face serious headwinds from labour unrest and economic strain.
Daily crude production now ranges between 1.7 and 1.83 million barrels, while active rigs jumped from 31 in January to 50 by mid-year, according to Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri. Speaking at Africa Energy Week, Lokpobiri credited the rise to President Bola Tinubu’s reforms, which are attracting long-delayed investments back into exploration and production.
The turnaround draws strength from the government’s “Project One Million Barrels” initiative and the Petroleum Industry Act (PIA), which, he said, offers a predictable business environment. Over $5.5 billion in new investment commitments have followed IOC asset divestments, adding roughly 200,000 barrels per day to national output. “Nigeria is open for business,” Lokpobiri told delegates, highlighting renewed investor confidence.
Refinery Turmoil Overshadows Progress
Downstream operations tell a different story. Aliko Dangote’s $20 billion, 650,000-bpd refinery in Lagos, once celebrated as Africa’s industrial pride, now faces strikes, sabotage claims, and financial challenges.
Earlier this week, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) launched a nationwide strike after Dangote Refinery dismissed 800 workers for alleged acts of sabotage. The company stated that it acted to protect its facility, while the union accused management of targeting labor leaders.
The standoff disrupted activities at NNPCL and other key regulators, raising fears that the conflict could spill into upstream production if not contained.
Even before the labour dispute, Dangote’s refinery struggled to stay profitable. Aliko Dangote admitted to reselling crude cargoes and halting local fuel sales because currency distortions made operations unsustainable. Buying crude in US dollars but selling refined fuel in a weakened naira has eroded profit margins.
Analysts note that without government support or pricing reforms, the refinery may struggle to maintain consistent operations.
A Paradox That Persists
Nigeria’s upstream rebound is genuine — rigs are active, and output is rising. Yet, the refining sector continues to drag behind. While reforms have attracted new capital into exploration, downstream inefficiencies threaten to undermine those gains.
For a nation that ranks among the world’s largest crude exporters, the paradox remains: Nigeria still risks fuel shortages at home, even as its rigs pump harder than they have in years.