Energy Insights: The Quarterly

Executive Summary

The fourth quarter of 2025 marked a defining period for Nigeria's energy sector, shaped by upstream portfolio realignments, deeper implementation of the Petroleum Industry Act (PIA), and tangible progress in the country's energy transition. Developments during the quarter underscored a sector navigating structural change while consolidating operational stability.

A key highlight of the quarter was the completion of TotalEnergies' divestment of its 12.5 per cent non - operated interest in Oil Mining Lease 118, which is home to the Bonga deepwater field, for approximately USD 510 million. The acquisition by Shell Nigeria Exploration and Production Company ( SNEPCo ) and Nigerian Agip Exploration Limited reinforced the accelerating exit of international oil companies from mature and non - operated assets.

Nigeria sustained crude oil production at approximately 1.7 million barrels per day during the quarter, supported by improved security conditions, reduced pipeline disruptions, and ongoing upstream investments across the Niger Delta.

This production stability provided a stronger foundation for regulatory reforms and investment focused initiatives under the PIA.

Regulatory momentum in Q4 2025 for Nigeria's oil and gas sector was reinforced with the issuance of the 2025 Licensing Round Guidelines and the official launch of the 2025 Licensing Round, effective December 1, 2025. Announced by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), former Chief Executive Officer Gbenga Komolafe at the Project 1MMBOPD Forum in London, the round under the Petroleum Industry Act features competitive fiscal terms, enhanced data transparency, and clear development timelines, aimed at attracting technically capable and well - capitalised investors while encouraging early field development commitments. The initiative also seeks to strengthen collaboration among investors, financial institutions, and stakeholders to accelerate production growth and expand investment in Nigeria's upstream sector.

Beyond hydrocarbons, Q4 marked a notable milestone in Nigeria's energy transition. For the first time, imports of solar cells for local assembly exceeded imports of fully manufactured solar panels, signaling a structural shift toward domestic value addition in the renewable energy value chain. This progress was driven by policy reforms such as the Federal Government's push to localise renewable energy manufacturing under the Energy Transition Plan and the advancement of the Electric Vehicle Transition and Green Mobility Bill with local assembly requirements, increased private sector participation, and significant deal activity within the renewable energy ecosystem.

In the renewable energy domain, October 2025 marked a historic shift in solar import dynamics, with imports of solar cells (110 MW) surpassing imports of fully assembled panels (82 MW) for the first time. This milestone reflects Nigeria's movement toward domestic value addition in solar manufacturing, supported by policy reforms and investment

In the renewable energy domain, October 2025 marked a historic shift in solar import dynamics, with imports of solar cells (110 MW) surpassing imports of fully assembled panels (82 MW) for the first time. This milestone reflects Nigeria's movement toward domestic value addition in solar manufacturing, supported by policy reforms and investment commitments catalysed through initiatives like the Nigeria Renewable Energy Innovation Forum. Nearly USD 500 million in manufacturing and supply agreements have helped expand local assembly capacity.

The quarter was further characterised by rapid growth in decentralised solar adoption and steady progress in establishing the regulatory and infrastructure frameworks required to integrate distributed renewable energy into the national power mix. These developments reflect a gradual but meaningful alignment of Nigeria's energy policy objectives with industrial development, energy access, and long - term sustainability goals. Overall, Q4 2025 highlighted a Nigerian energy sector in transition, consolidating upstream value under a reformed regulatory regime while laying the groundwork for a more diversified, resilient, and sustainable energy future.

Oil and Gas Sector

Nigeria's crude oil production in 2024 averaged about 1.5 million barrels per day. In 2025, oil production capacity amounts to slightly over 1.7 million barrels per day representing a 10 per cent year - on - year increase. Notably, Nigeria's crude oil output in Q4 met 96 per cent of its Organization of Petroleum Exporting Countries (OPEC) quota, which is currently set at 1.5 million bpd, demonstrating the country's capacity to meet its production targets under the OPEC agreement.

A defining corporate development during the quarter was the consolidation of indigenous ownership in Nigeria's upstream sector, with Heirs Energies Ltd (a subsidiary of Heirs Holdings) acquiring a 20.07 % stake in Seplat Energy Plc from Maurel & Prom in a $500 million transaction, making Heirs the largest shareholder in one of Nigeria's foremost independent oil and gas producers and further reinforcing local capital participation in strategic energy assets.

Highlighting progress on the Ajaokuta –Kaduna –Kano Gas Pipeline (AKK), Gas production increased from about 6.5 billion standard cubic feet per day to over 7 billion standard cubic feet per day. These improvements are underpinned by very structural changes within the sector.

Moreover, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently announced commencement of the licensing round under the Petroleum Industry Act, which would primarily focus on discovered but underdeveloped fields, fallow assets in the Niger Delta and natural gas projects. The licensing round is majorly aimed at reviving idle assets and boost the Country's oil production capacity.

On the commercial front, price war in petrol prices which is driven by competition between Dangote Refinery, NNPC, and independent marketers has led to a significant drop in petrol prices, from over N1,200 per litre in November 2024 to as low as N739 per litre in December 2025.

The quarter was more clearly defined by infrastructural development milestones and upstream market adjustments that collectively underscored a stabilizing downstream sector, strengthening domestic refining and production capacity, and a regulatory environment increasingly aligned with investor expectations and national energy security objectives.

Power Sector

In Q4 2025, Nigeria's power sector was shaped by renewed efforts to stabilise market finances and advance critical infrastructure reforms, even as long - standing liquidity challenges and grid constraints persisted. A major development during the quarter was the finalisation of the implementation framework for the ₦4 trillion Presidential Power Sector Debt Reduction Plan. This marked a decisive step by the Federal Government to address legacy debts owed to generation companies and gas suppliers, which have historically weakened balance sheets across the electricity value chain. While the intervention is expected to improve liquidity and restore investor confidence, rising indebtedness among distribution companies remained a key concern, with unpaid obligations increasingly constraining grid expansion and new investment.

Infrastructure development recorded incremental progress. Approvals were granted to conclude the Afam power plant privatisation , while concession arrangements for hydropower projects covering Oyo and Kogi States advanced during the quarter. At the federal level, a presidential directive was issued to expand substation upgrades under the Siemens Presidential Power Initiative, reinforcing ongoing efforts to strengthen transmission capacity. At the subnational level, Delta State approved an ₦18.1 billion bank guarantee for the Asaba power project, reflecting growing state level participation in electricity infrastructure delivery.

Policy focus in the distribution segment centred on metering and loss reduction. Federal approval of ₦28 billion for prepaid meters, alongside ongoing metering programmes supported by development partners, was aimed at improving revenue assurance and reducing commercial losses.

Despite these efforts, weak collections, poor metering coverage, and structural revenue gaps continued to strain distribution company operations and limit sector wide performance.

A notable regional milestone was achieved during the quarter with Nigeria's successful grid synchronisation test with the West African Power Pool. This development represents an important step toward regional power trading, improved system reliability, and deeper integration within the West African electricity market.

Overall, Q4 2025 reflected a power sector gradually shifting from short - term crisis management toward medium - term reform execution.

While fiscal interventions, infrastructure approvals, and regional integration efforts signal stronger reform momentum, persistent liquidity challenges and investment gaps underscore the need for sustained implementation and deeper private sector participation to achieve long term stability in Nigeria's electricity sector.

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