Nigerian Energy Pulse – February 2026

Coastal logistics could push petrol price ₦1,000 – Dangote
Nigeria targets 2.5M barrels crude/day – FG push
FG Moves to Reinforce Gas-to-Power Chain for Industrial Growth

Dangote Petroleum Refinery has warned that continued reliance on coastal logistics for distribution of refined petroleum products could drive petrol prices close to ₦1,000 per litre if the additional costs associated with coastal shipping are passed on to consumers. In a statement on February 6, the refinery said coastal logistics — which involve port charges, maritime levies and vessel‑related costs — could add approximately ₦75 per litre to the cost of petrol, with significant implications for consumer prices and market stability.

Dangote Petroleum Refinery highlighted its preference for gantry loading, a system of direct evacuation from its facility via tanker trucks, as a more cost‑efficient method for supplying markets, noting that its gantry infrastructure has the capacity to handle high volumes of petrol and diesel daily. The refinery also said marketers have the choice of distribution mode but maintained that coastal logistics introduce avoidable costs that can affect price stability.

Dangote’s statement reiterated that the refinery only imports intermediate feedstock in line with global industry practice during maintenance of certain units, and challenged claims that it imports finished products, urging regulatory scrutiny of such assertions. The refinery further emphasised that increased local refining has contributed to reduced importation, eased foreign exchange pressures and supported a stronger naira.

In Abuja, the Federal Government has intensified calls for International Oil Companies (IOCs) operating in Nigeria to significantly increase crude oil output, aligning with national targets to lift production to 2.5 million barrels per day (bpd) by 2027. Government officials told the ongoing 2026 Nigerian International Energy Summit that the current average output — around 1.6 million bpd — falls well short of both this target and the earlier budget benchmark of 2.06 million bpd.

The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, highlighted that upstream drilling and production activities underpin downstream stability — from refining feedstock to fuel distribution — and that operational enhancements by IOCs are crucial to bridge the production gap. He noted that reforms under the Petroleum Industry Act have created a more enabling environment for oil operators, though measurable action remains urgently needed.

President Bola Tinubu, speaking at the same summit, reiterated the broader national ambition to raise crude output over the next decade, including longer-term goals of around 3 million bpd by 2030, further underlining the government’s focus on upstream performance as central to economic stability and growth.

Parallel to efforts in oil production, the Nigerian Government has initiated measures to strengthen the gas‑to‑power supply chain, recognising natural gas as a cornerstone of electricity generation and industrial activity. Officials stressed that gas currently fuels more than 70 per cent of the nation’s on‑grid electricity supply, but infrastructure gaps, unreliable supply arrangements, and commercial bottlenecks have historically constrained consistent power delivery.

According to the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, government strategies now emphasise reliable end-to-end delivery — from extraction to processing, pipelines and end users such as power plants — to ensure stable electricity that supports businesses and households. Long-term, commercially viable gas supply contracts are being prioritised to boost investor confidence and guarantee dependable fuel for power generation.

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The Federal Government’s simultaneous push on upstream production and downstream reform reflects a broader strategy to integrate Nigeria’s energy value chain. Officials and industry participants have repeatedly emphasised that weaknesses in one segment — whether crude production or logistics networks — can have ripple effects across refining efficiency, fuel availability and price stability.

The country’s current crude production performance, averaging roughly 1.6 million bpd, lags behind both budgetary expectations and national ambitions. Government pressure on oil majors aims to close that gap through improved drilling efficiency, exploration activity and increased investment, while fiscal incentives and regulatory reforms seek to attract sustained capital inflows.

In the gas sector, a newly unveiled Gas Master Plan 2026 (GMP 2026) serves as a formal roadmap to elevate Nigeria’s gas production from around 8 billion cubic feet per day (bcf/d) to 10 bcf/d by 2027 and potentially 12 bcf/d by 2030, with an investment pipeline of more than $60 billion across the value chain. The initiative aims to translate Nigeria’s abundant gas resources — among the largest in Africa — into reliable domestic supply and industrial utilisation.

The Federal Government’s appeal to IOCs emphasised that upstream operators, both local and foreign, should expand output beyond current levels to meet ambitious targets. The government pointed to changes under the Petroleum Industry Act (PIA) that level the operational playing field for international and indigenous producers, while offering fiscal incentives designed to reduce operating costs and stimulate new investments.

Senator Lokpobiri stressed during the panel session that the success of Nigeria’s petroleum sector depends on the collective performance of upstream operators, noting that crude supply constraints not only reduce export earnings but also limit the feedstock available for refineries — which in turn affects fuel supply and prices.

Industry movements in early 2026 also reflect shifts in asset control and production strategy. Indigenous operators such as Seplat Energy and others have been consolidating assets previously held by larger international majors, particularly in onshore and shallow-water regions, aiming to strengthen local participation in upstream activities.

Although complete industry figures for early 2026 are still emerging, upstream performance in 2025 saw Nigeria producing within the 1.4 million–1.8 million bpd range, with regulatory interventions and approvals contributing to incremental gains. Sustained policy clarity and capital deployment remain central to bridging the gap to national targets.

While indigenous firms have made progress, analysts note that both increased foreign investment and improved domestic capacity building will be required to maintain momentum and meet rising production benchmarks.

At the heart of gas sector reforms is the Gas Master Plan 2026, positioned by industry stakeholders as a transition from policy formulation to disciplined execution. The Plan prioritises infrastructure build-out — including pipelines, processing facilities and distribution networks — designed to support major industrial hubs and facilitate wider usage across sectors such as power generation, petrochemicals and compressed natural gas (CNG) adoption.

The strategic expansion of production targets, from immediate infrastructure to long-range supply availability, is also closely linked to broader national goals of energy security and economic diversification. With proven reserves exceeding 200 trillion cubic feet, Nigeria’s gas potential remains considerable, but translating that potential into consistent market supply requires coordination across regulatory frameworks, commercial contracts and financing arrangements.

In a move that aligns with the Gas Master Plan’s execution ambitions, Dangote Group subsidiaries — including Dangote Petroleum Refinery — have entered expanded gas supply agreements with units of the Nigerian National Petroleum Corporation (NNPC). These contracts are designed to secure the energy inputs necessary for refinery expansion and support broader industrial objectives.

Industry observers say such strategic gas deals are intended to reduce supply disruptions, anchor long-term investment and ensure that gas resources flow reliably to key economic sectors. Analysts also note that wider integration of gas supply with refining and petrochemical facilities is crucial to boosting output and reducing dependency on imported fuels.

Against the backdrop of upstream and gas reforms, downstream fuel pricing remains sensitive to logistics and market forces. Dangote Refinery’s warning that coastal logistics costs could elevate petrol prices highlights how distribution inefficiencies and added fees can complicate efforts to maintain stable and affordable pump prices.

Domestic refining gains — including higher volumes from Dangote’s plant — have helped reduce Nigeria’s dependence on imported petrol, a shift that has contributed to price moderation in some regions. However, persistent vulnerabilities in supply chains, exchange rate volatility and distribution bottlenecks continue to exert pressure on downstream pricing dynamics.

Beyond supply and distribution concerns, Nigeria’s energy sector is also contending with external market pressures. Volatility in global crude prices and domestic currency exchange rates has been flagged by international rating agencies as a risk factor for the asset quality of Nigerian banks, especially those with significant exposure to energy sector loans. While these risks are not unique to Nigeria, they add an additional layer of complexity to fiscal planning and investment strategies within the energy value chain.

Financial sector observers point to the nexus between crude price volatility and financing costs, noting that swings in prices can affect upstream project viability, revenue forecasts and balance sheet stability for lenders heavily involved in energy financing.

The combined focus on boosting crude production, executing a robust gas master plan, strengthening distribution networks and mitigating price pressures underscores Nigeria’s holistic approach to managing its energy challenges. By aligning policy, regulatory reforms and strategic partnerships across the oil and gas spectrum, policymakers aim to reduce bottlenecks, attract investment and stabilise energy markets.

Success in these areas could deepen Nigeria’s role as a regional energy hub, enhance industrial competitiveness and provide more predictable supply conditions for consumers and businesses alike. However, achieving these outcomes remains contingent on consistent execution, investor confidence and infrastructure development across the entire energy value chain.