A time of renewal for Nigeria’s oil industry

Nigeria

Senator Heineken Lokpobiri, minister of state for petroleum resources (oil) of Nigeria, talks to The Energy Year about Nigeria’s oil production targets, how they fit with the country’s OPEC quota, the strategy for achieving them, how the country is improving synergies between the upstream and downstream, and its importance in Africa and globally.

This interview is featured in The Energy Year Nigeria 2025

What are Nigeria’s targets and expectations in terms of oil production, and how do they fit with the country’s OPEC quota?
The first point to mention is that our ambition is to produce 2.5 million-3 million bopd in 2025. During the pandemic, Nigeria was able to produce 2.5 million bopd without any new investments. So, that target is feasible, particularly now that it is backed by new funding for exciting projects, as shown by the upstream FIDs reached in 2024.
Furthermore, the government budget is based on an output of 2.6 million bopd, and my duty as a minister is to guarantee that budget obligations are fully met, with the support of all stakeholders in the oil and gas industry.
Regarding the OPEC quota, it is important to underline that the bulk of what we produce today that is categorised as crude actually includes condensates as well, which are not covered by the quota. Almost half of what is produced today is condensate, which is a high grade of crude that is sold for a high price.
However, today all crude and condensates are mixed together, and only a very small proportion is categorised as condensate. Our ambition for 2025 is to engage the terminal operators, asking them to designate some reservoirs for condensate and others for crude. As of today, we are not violating any quota. We don’t intend to exceed the OPEC quota of 1.5 million barrels of crude allocated to Nigeria.

Can you walk us through the peculiarities of Nigerian crude and the endeavours to create better synergies between the upstream and downstream sectors?
Nigerian crude is very high quality, and this is reflected in the price of Bonny Light, which is more expensive than WTI [West Texas Intermediate]. It is sweet and light, and these characteristics help us to be well positioned in the downstream arena. In fact, if we refine all our products in Nigeria, we will get more value. The truth is that, when you sell a barrel of crude, you get 18 times less than what you will get if you refine it in-country.
Our law here says we have an obligation to supply the refineries in Nigeria. We are working very hard to increase the number of barrels produced so that we can meet our domestic and crude supply obligations and domestic refining needs. If all the refineries are working, that puts the total refining capacity at over 1 million bopd. The refineries in Port Harcourt and Warri have been rehabilitated, plus we have the Dangote Refinery, the upcoming BUA Refinery in Akwa Ibom and a few modular refineries.
Nonetheless, even if we have the crude to supply all the refineries, it will make economic sense for refiners to import some crude of lower quality and then blend it with the Nigerian crude to create more byproducts and ultimately make more money.

What is your assessment of Nigeria’s position in Africa and globally?
Nigeria is a very strategic partner in OPEC and a key producer of oil and gas in Africa. What we want to do is to produce more, but responsibly, always looking at how to ensure oil price stability and a stable supply chain.
In the past decade, we had basically no investment in hydrocarbons, but now the wheel is starting to spin again. Of the four FIDs reached in Africa in 2024, three occurred in Nigeria. More will come as big investments have already been announced in 2025, and we are working on one that will be about USD 20 billion that is at the finish line.
Our aim is to maintain our standpoint as Africa’s leading oil and gas producer and to fully exploit our potential. You will be shocked to hear that the crude oil reserve figure of about 37 billion barrels of crude is actually outdated. That figure has not been updated in the past 20 years.
Africa has been opening new frontiers recently in oil and gas exploration and production, with Namibia being one of the latest examples. We are confident that Nigeria has more hydrocarbons deposits which have not been confirmed yet due to a lack of seismic acquisition. From our early estimates, we believe our reserves are perhaps double that 37-billion-barrel figure.
With these new investments coming in and the new policy measures implemented such as the “drill-or-drop” principle, there will be more exploration, and Nigeria will cement its position as the backbone of oil and gas operations in Africa while rising as a stronger supplier that can satisfy the needs of the rest of the world as well.

What is the strategy to step up production, and what do you see as the country’s most significant opportunities and challenges ahead?
When I became minister in August 2023, our production level was about 1 million bopd. As of February 2025, we are producing approximately 1.8 million bopd. So, we have increased production by 80%, and we are looking to increase that to at least 2.5 million bopd.
In this way, we will be able to meet domestic and global demand. To increase our output, we have to put back in production those oil wells that have been locked since the 1960s. To reach that target, every barrel is important, and increased production would benefit not only us.
Nigeria has the highest population of any country on the continent and one of its largest economies. Whatever happens here makes Africa stronger, and any barrel of oil produced here, whether refined or crude, benefits Africa as a whole.
That was why one of the major actions we had to take was the full deregulation of the downstream sector. Before this, whenever you imported refined product into Nigeria, it would find its way into the West African subregion, because it was cheaper. We were practically subsidising the entire West African subregion.
What we decided to do was to stop it – and this government was the only government that had the courage to do it in 40 years. Now products are available, and the price is stabilising. We believe that it is good for the oil and gas sector, which, globally, is a deregulated one.
Regarding the biggest challenges, the production cost per barrel is a serious concern for us, as ours is one of the highest in the world, between USD 35-45 per barrel, whereas in Saudi Arabia it is less than USD 10 per barrel. Some of the reasons are out of our control. Most of our reserves are offshore, where extraction is more expensive compared to onshore. Onshore reserves are predominant in countries such as Saudi Arabia and Kuwait.
However, other reasons for our expensive production costs are connected to the security issues Nigeria has been suffering from for a long time. Some of these issues have been tackled, and we are working to break those costs down in order to be more competitive in an increasingly fierce environment. It is a simple matter of bringing down costs, which in turn will generate more value from our production.

How do you plan to combine an increase in the country’s oil production with greater sustainability?
The energy transition has to be addressed in a pragmatic way. Countries around the world are more sensitive now than in the past regarding how they produce oil, and they are increasingly focusing on decarbonisation and green energy, but this does not entail abandoning hydrocarbons.
Europe and America continue to fund oil and gas investments. The UK issued new licences for exploration activities in the North Sea. Norway is ramping up its oil production. The new US administration’s policies about increasing drilling operations are well known.
If we want Africa to develop, we need to rely on hydrocarbons. It would be unacceptable for the continent to be told not to continue with fossil fuel production. Moreover, if you look at global emissions, the entire African continent contributes only about 3%. The UK contributes 4.8%, and China and the USA contribute 55% combined.
The narrative we have heard has been, “Africa, don’t produce fossil fuel. We are going to give you aid to secure or acquire alternative energy sources.” We have these in abundance, but solar, wind and hydro are very expensive, and they require more than foreign aid.
We can solve energy problems in Africa only with sustainable investments in oil and gas. African countries have signed on to the Paris Agreement. In Nigeria, there are robust legal frameworks to regulate the oil and gas industry and to continue exploration but in a cleaner, greener and more sustainable way.
The world needs to treat Africa differently because Africans are the ones suffering from energy poverty, with over 900 million people with no means of clean cooking and more than 600 million people without access to electricity and therefore no chance to industrialise. People must survive first.
We need to address the energy transition while always keeping in mind that, without industrialisation, there can be no sustainable economic growth and thus no means to implement a successful transition.
Talking about solutions, the world has to come together to see how we can develop technologies for carbon capture. Looking inwards, in Nigeria we have the Climate Change Act. We have penalties for gas flaring. We are using gas as a transition fuel.
The bottom line here is that we already have substantial investments in oil and gas. Allow us to continue on this trajectory instead of using funding to develop a greener energy mix. Let me be clear: We are not against the energy transition, but before you talk about transition, you must have energy, and right now we have nothing to transition from.

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