Upstream Oil and Gas Market in Nigeria Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030)

Nigeria Upstream Oil and Gas Market Analysis

The Nigeria Oil and Gas Upstream Market size is estimated at 4.80 million cubic feet in 2025, and is expected to reach 5.16 million cubic feet by 2030, at a CAGR of 1.45% during the forecast period (2025-2030).

Nigeria's oil and gas upstream sector is undergoing significant transformation driven by regulatory reforms and infrastructure development initiatives. The country possesses substantial hydrocarbon resources, with approximately 208.62 trillion cubic feet of proven gas reserves as of 2022, marking a 1.01% increase from the previous year. The Nigerian government has been actively implementing gas-centric policies and programs, including the National Gas Policy (NGP), to ensure gas-based industrialization and sustainable economic growth. The sector has witnessed increased attention towards gas infrastructure development, particularly through the Nigerian Gas Flare Commercialization Program (NGFCP), which aims to reduce gas flaring and optimize resource utilization.

The oil and gas upstream sector has attracted significant investments from major international oil companies, demonstrating continued confidence in Nigeria's hydrocarbon potential. In December 2023, Shell announced plans to invest approximately USD 5 billion in offshore oil opportunities and committed an additional USD 1 billion over the next five to ten years to boost natural gas output. This investment surge coincides with TotalEnergies' significant Ntokon oil and gas exploration discovery in mid-2023, which successfully tested at approximately 5,000 barrels per day of 40° API oil, highlighting the continued exploration success in the region.

Security challenges and operational inefficiencies continue to impact the sector's performance, particularly in onshore operations. In 2022, Nigeria's daily natural gas production averaged 44.3 billion standard cubic meters, representing relatively low utilization of its vast reserves. The government has responded by implementing new security measures and technological solutions to combat these challenges. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has also taken steps to optimize resource management, including reviewing inactive petroleum exploration leases and promoting more efficient operational practices.

The export market plays a crucial role in Nigeria's oil and gas upstream sector, with approximately 27% of natural gas production directed towards exports in 2022, contributing significantly to government revenue. The country is actively working to expand its export capabilities while simultaneously developing domestic gas infrastructure. Recent developments include the implementation of the Mini Bid Round 2022, which opened up seven offshore blocks covering approximately 6,700 km² in water depths of 1,150m to 3,100m for international investment. These initiatives are complemented by the government's ambitious energy transition plan, which seeks USD 10 billion in funding to expand gas power generation and achieve universal electricity access by 2030.

Nigeria Upstream Oil and Gas Market Trends

Increasing Investments in Exploration and Production Activities

Nigeria's oil and gas exploration and production sector is witnessing a significant surge in investments, driven by government reforms and attractive opportunities in both offshore drilling and onshore drilling assets. In December 2023, Shell announced plans to invest approximately USD 5 billion in offshore drilling opportunities in Nigeria, along with an additional USD 1 billion commitment over the next five to ten years to boost natural gas output. This substantial investment demonstrates growing confidence in Nigeria's upstream sector, particularly as the country holds significant proven gas reserves of 208.62 trillion cubic feet as of 2022. The investment climate has been further enhanced by the Nigerian government's implementation of the Petroleum Industry Bill (PIB) in 2021, which has created a more conducive environment for foreign investment through amendments to regulations, royalties, and taxes.

The momentum in exploration and production activities is evidenced by recent discoveries and development projects. In mid-2023, TotalEnergies announced the Ntokon oil and gas discovery on OML102 offshore Nigeria, with successful testing achieving up to 5,000 barrels per day of 40° API oil. Additionally, the Nigerian National Petroleum Company Limited secured a USD 5 billion corporate finance commitment from the African Export-Import Bank to fund major investments in the upstream sector. The government's proactive approach is also reflected in the 2022/2023 Mini Bid Round, which offered seven offshore blocks covering approximately 6,700 km² in water depths of 1,150m to 3,100m. These initiatives align with Nigeria's ambitious target to increase crude production to 2.6 MMbbl/d by 2027, supported by the renewal of production-sharing contracts for five Oil Mining Leases (OMLs) - 128, 130, 132, 133, and 138, which is expected to generate approximately USD 500 billion in revenue for the country.

Segment Analysis: Location of Deployment

Offshore Segment in Nigeria Oil and Gas Upstream Market

The offshore drilling segment dominates the Nigeria oil and gas upstream market, commanding approximately 67% market share in 2024. This segment's prominence is driven by significant developments in both deep and shallow water projects, with several major international oil companies focusing their investments in offshore drilling exploration and production activities. The segment's growth is further bolstered by recent discoveries like TotalEnergies' Ntokon oil and gas discovery on OML102 offshore, which successfully tested at rates of approximately 5,000 barrels per day. Shell's announcement in 2024 to invest about USD 5 billion in offshore oil opportunities and an additional USD 1 billion over the next five to ten years for natural gas output expansion demonstrates the continued attractiveness of Nigeria's offshore sector. The segment is projected to grow at around 2.5% CAGR from 2024 to 2029, driven by upcoming projects such as TotalEnergies' offshore Preowei Phase I development and Shell's Bonga North development.

Onshore Segment in Nigeria Oil and Gas Upstream Market

The onshore drilling segment plays a crucial role in Nigeria's oil and gas upstream market, particularly in the development of mainland oil fields and gas deposits. This segment faces unique challenges, including security concerns, oil theft, and infrastructure vandalism, which have impacted production levels and investment decisions. However, the segment continues to attract attention from domestic players and some international operators who are working to optimize production from existing fields and develop new ones. Recent initiatives by the Nigerian government to revoke unused oil exploration licenses and promote new investments aim to reinvigorate onshore drilling exploration and production activities. The segment's development is also supported by the government's focus on increasing domestic gas utilization and reducing gas flaring, which creates opportunities for onshore gas field development. Additionally, the use of well intervention techniques is being explored to enhance production efficiency.