Nigeria’s upstream oil sector is regaining momentum, with active oil rigs rising by 66%, reflecting stronger investor confidence and the effect of new policy reforms designed to boost production.
The Nigerian National Petroleum Company Limited (NNPCL) also said it is working to raise crude production to 1.8 million barrels per day before the end of 2025, reinforcing the sector’s upward trajectory and the government’s push to restore full production capacity.
According to data from the Organisation of Petroleum Exporting Countries (OPEC), Nigeria operated 15 rigs in August 2025, up from nine in May, marking the second-highest count this year. This steady improvement followed a low in May, when insecurity and high operational costs slowed drilling. The rebound, therefore, indicates renewed exploration and development activity as producers respond to a more attractive business climate.
At the centre of this resurgence is President Bola Tinubu’s Upstream Petroleum Operations Cost Efficiency Incentives Order (2025), signed in May. The executive order introduces performance-based tax incentives that reward companies achieving measurable cost savings against benchmarks set by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). The initiative builds on the 2024 reform package, which enhanced fiscal terms, streamlined project approvals, and strengthened local content participation.
Tinubu stated that the incentives “signal to the world that Nigeria is building an oil and gas sector that is efficient, competitive, and works for all Nigerians.” Industry analysts say the policy is already attracting new investments and advanced technology to support the country’s production goals.
Output Growth and Expansion Prospects
The impact of these reforms is already visible. Nigeria’s crude oil production rose to 1.505 million barrels per day (bpd) in June, representing a 3.6% increase from May. This growth enabled Nigeria to meet its OPEC quota for the second time in 2025. Analysts believe that continued progress could stabilise national oil revenue and improve foreign exchange earnings.
Looking forward, the Nigerian National Petroleum Company Limited (NNPC Ltd) plans to lobby OPEC for a 25% quota increase by 2027. The company argues that the rapid growth in domestic refining capacity, driven by the 650,000 bpd Dangote Refinery and several modular projects nearing completion, justifies the request.
After years of declining output caused by theft, pipeline vandalism, and policy uncertainty, the combination of higher rig activity and improved governance indicates that Nigeria’s long-awaited upstream recovery may finally be taking shape.
Experts Call for Rig Surge to Translate into Higher Output
Complementing OPEC’s figures, the NUPRC reported that Nigeria’s total rig count has surged from eight in 2021 to 69 as of October 2, 2025, a 762.5% increase in four years. The breakdown includes 40 active rigs, 8 on standby, 5 warm-stacked, 4 cold-stacked, and 12 in transit.
According to the commission, this growth reflects renewed investor confidence consistent with President Tinubu’s assertion that “Nigeria is ready for business” under a stable and reformed regulatory climate.
Energy economist Prof. Omowumi O. Iledare, Executive Director of the Emmanuel Egbogah Foundation, commended the NUPRC’s transformation since the Petroleum Industry Act (PIA) 2021. He said the separation of policy, regulatory, and commercial roles has enhanced institutional integrity. However, he cautioned that long-term sustainability, not short-term statistics, must define success.
“The challenge ahead is to convert this rig resurgence into sustained crude output, reserves replacement, and improved cost efficiency,” Iledare noted.
He added that fiscal and governance indicators are encouraging. For example, surpassing revenue targets by over 80% in 2024 and approving nearly $40 billion in new Field Development Plans demonstrate strong investor optimism. Still, he emphasised that these gains must be supported by consistent policies, transparent implementation, and credible performance tracking.
Strengthening Governance and Regional Leadership
Iledare also praised the NUPRC’s adoption of digital bid rounds, the “Drill-or-Drop” compliance policy, and gas-flare commercialisation, noting that these align with global best practices. Additionally, he highlighted the commission’s ₦358 billion remittance to Host Community Development Trusts, calling it a major step toward social accountability in Nigeria’s oil sector.
Regionally, Nigeria’s leadership in establishing the African Petroleum Regulators Forum (AFRIPERF) underscores the country’s growing influence in Africa’s hydrocarbon governance and energy transition dialogue.
“Performance is not just about what is achieved, it is about what endures and adds value across generations,” Iledare concluded.