An energy expert, Wumi Iledare, says Nigeria’s oil and gas sector recorded a measurable rebound in 2025, driven by improved security, relative regulatory stability and renewed operational activity.

Mr Iledare, a professor emeritus of petroleum economics and policy research at the Louisiana State University Center for Energy Studies, USA, said the gains remain fragile and far from transformational.

He stated this on Thursday in Lagos while reviewing sector performance in 2025 and outlining imperatives for 2026.

According to Mr Iledare, the improved security environment and gradual stabilisation under the Petroleum Industry Act (PIA), combined with renewed government focus on operations, helped reverse parts of the sector’s recent decline.

“The direction of travel is positive. However, the temptation to declare a full turnaround should be resisted. Recovery is not the same as transformation,” he said.

He noted that crude oil production improved from recent lows, averaging between 1.6 and 1.7 million barrels per day in 2025, describing the development as a meaningful recovery.

He, however, cautioned that claims of consistently meeting Nigeria’s OPEC+ quota were not fully supported by production and fiscal data.

“Average output remained below benchmark levels, and oil revenue underperformed budget expectations in the first half of 2025.

“The gains were real but uneven and not yet structurally secured,” he said.

Mr Iledare, who is also the executive director of the Emmanuel Egbogah Foundation, acknowledged progress in curbing crude oil theft and vandalism.

He attributed improvements to enhanced surveillance and stronger community–security collaboration.

“Headline claims of a 90 per cent reduction should be treated with caution.

“Theft estimates remain largely administrative and not independently audited. The trend is credible; the precision is not,” he said.

On upstream activity, he observed that while rig counts rebounded, growth figures were exaggerated by comparison with the unusually depressed 2021 base year.

He added that not all counted rigs were fully active, adding that translating rig numbers into sustained production growth would depend on financing availability, evacuation infrastructure and contract stability.

Mr Iledare said output recovery in 2025 was incremental and driven by multiple factors, including initiatives such as Project One Million Barrels and cost-efficiency measures that refocused attention on brownfield and dormant assets.

“Production outcomes cannot be attributed to any single initiative. Petroleum systems respond to a bundle of incentives, risks and constraints — not policy branding,” he said.

He described the downstream sector as the most contested reform space, noting that Nigeria operates an oligopolistic market structure dominated by a few large players.

He said public debate often framed competition as a moral contest between investors and importers, a view he described as misleading.

“From a petroleum economics standpoint, competition is defined by market structure and regulatory neutrality, not by the size of capital deployed.

“Imports do not negate competition unless subsidised or preferentially treated,” he said.

On the Dangote Refinery, Mr Iledare said its strategic importance to Nigeria’s industrial narrative was not in doubt.

“Claims of sustained 85 per cent utilisation, massive import reduction and billions of dollars in foreign-exchange savings should be seen as projections rather than realised outcomes.

“The refinery’s impact remains contingent on feedstock logistics, pricing transparency, market governance and regulatory consistency,” he said.

He explained that proposed upstream divestments by the Nigerian National Petroleum Company Ltd. (NNPCL) reflected deeper structural pressures.

“This includes capital scarcity, rising operational risk and the limits of state participation in high-risk ventures.

“Divestment is not abdication; it is portfolio optimisation. But without strong board oversight, transparency and disciplined reinvestment of proceeds, it risks becoming a fiscal patch rather than a strategic reset,” he said.

In the gas sector, Mr Iledare said progress on reserve growth, reduced flaring and increased domestic supply broadly aligned with regulatory disclosures.

However, he warned that major projects such as the Ajaokuta–Kaduna–Kano (AKK) pipeline and the Nigeria–Morocco gas pipeline remained vulnerable to execution risks and financing timelines.

“Optimism is warranted; complacency is not,” he said.

He identified the disconnect between production recovery and fiscal performance as one of the clearest signals of unfinished reform.

“Higher output did not translate proportionately into public revenue, reflecting price volatility, cost structures and governance leakages,” he said.

He added that attributing Nigeria’s improved GDP growth primarily to oil risked overstating the sector’s current contribution.

Mr Iledare stressed that the overarching lesson of 2025 was that institutions matter more than announcements, calling for stronger regulatory guardrails and empowered boards of directors to ensure credibility and continuity.

He also underscored the need for visible sectoral leadership, noting that Nigeria’s oil and gas industry was too strategic to be managed by fragmented or virtual authority.

“A substantive, accountable minister remains a necessary condition for coherence and sustained impact.

“2025 was a year of recovery and re-anchoring, not full transformation. The gains are real but fragile.

“The imperative for 2026 is consolidation, discipline and institutional endurance,” Mr Iledare said.

(NAN)