Nigeria has increased its share of Africa’s upstream final investment decisions (FIDs) from 4% to 40% in just two years, according to a new government-backed review that points to a sharp turnaround in investor confidence following a series of energy sector reforms.

The report, titled Nigeria’s Energy Sector Reforms 2023–2026: A Three-Year Review, was published by the Office of the Special Adviser to the President on Energy and led by Special Adviser Olu Verheijen. It outlines how regulatory, fiscal and operational reforms introduced under President Bola Tinubu helped revive upstream investment after years of stagnation.

According to the review, Nigeria now has a project pipeline valued at approximately $50 billion extending beyond 2026, marking one of the country’s strongest periods for upstream investment activity in more than a decade.

Between 2014 and 2023, Nigeria lagged behind several African peers in attracting upstream investment despite holding 37.5 billion barrels of proven oil reserves, the second-largest in Africa. During that period, Algeria captured 44% of African upstream FIDs and Angola secured 26%, while Nigeria fell behind countries including Mozambique, Ghana, Senegal and Namibia.

Production also deteriorated sharply during that period. In the third quarter of 2022, crude production dropped below one million barrels per day as underinvestment, pipeline vandalism and regulatory uncertainty weighed on the sector.

The report attributes the subsequent recovery to coordinated reforms targeting fiscal competitiveness, regulatory clarity and project execution timelines.

In 2023, the government clarified the respective mandates of the Nigerian Upstream Petroleum Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority, resolving jurisdictional overlaps that had complicated project approvals.

Additional measures included Presidential Directive 40, which introduced tax incentives for upstream projects, alongside a 2024 offshore tax incentive framework designed to attract international oil companies back into deepwater developments. Other reforms targeted project economics and operating costs, including the VAT Modification Order 2024 and the Upstream Cost Efficiency Order 2025.

The government also shortened contracting timelines at NNPCL from 36 months to a maximum of six months.

At the same time, the administration accelerated approvals for a series of IOC divestments that transferred onshore and shallow-water assets to indigenous operators.

Renaissance Africa Energy acquired Shell’s onshore portfolio, while Seplat Energy completed its acquisition of ExxonMobil’s Nigerian upstream interests. Oando took over assets previously held by Agip, and Chappal acquired Equinor’s local operations.

The four transactions were valued at approximately $4 billion and contributed to a recovery in production. According to the report, output increased by roughly 400,000 barrels per day between 2023 and 2025, reaching 1.6 million barrels per day, the highest onshore production level in 20 years.

The reforms also triggered major project approvals from international energy companies.

Shell Nigeria Exploration and Production Company sanctioned the $5 billion Bonga North deepwater project in December 2024 and committed an additional $2 billion to the HI Non-Associated Gas project. TotalEnergies and NNPCL also approved the $550 million Ubeta gas field development in June 2024.

Together, the projects account for more than $10 billion in signed investment commitments after nearly a decade of limited upstream sanctioning activity.

The broader project pipeline includes 11 additional developments, among them Bonga South West, Owowo, Usan and Erha. Nigeria also approved 28 field development plans in 2025 alone, representing an estimated $18.2 billion in investment and targeting around 1.4 billion barrels of reserves.

“When a government rebuilds fiscal competitiveness and regulatory predictability at the same time, capital responds,” said NJ Ayuk. “Nigeria has done both, and the FID numbers are concrete proof.”

The review also included a counterfactual projection illustrating the potential impact of the reforms. Without intervention, crude and condensate production was projected to decline from 1.371 million barrels of oil equivalent per day in 2022 to 579,000 barrels by 2030.

Under the reform trajectory outlined in the report, production reached 1.77 million barrels of oil equivalent per day in 2026, while the government has set a longer-term target of 3 million barrels per day. Export gas utilisation rose by 39% during the same period, while domestic gas utilisation increased by 7%.

The report noted that the long-term sustainability of the recovery will depend on whether institutional reforms remain in place and whether major deepwater projects approved in 2024 and 2025 proceed according to schedule.