Nigeria has recorded a 66 percent increase in the number of operational oil rigs, marking a rebound in upstream activity, driven by recent executive orders aimed at reforming the country’s oil and gas industry.
Data from the Organisation of the Petroleum Exporting Countries (OPEC) showed that Nigeria operated 15 rigs in August 2025, up from 9 in May.
This is the second-highest rig count the country has recorded this year, indicating renewed investor confidence and improved security in key oil-producing regions.
Data from OPEC showed that Nigeria recorded 12 rig counts in January, 10 in February and March, respectively, 11 in April, 9 in May, 11 in June and 13 in July.
Recent upstream reforms
In May, President Bola Tinubu signed an Executive Order that introduces performance-based tax incentives aimed at reducing costs, boosting revenue, and attracting new investment into Nigeria’s upstream oil and gas sector.
The new directive, Upstream Petroleum Operations Cost Efficiency Incentives Order (2025), builds on the success of his administration’s 2024 reform package, signalling a continued commitment to overhaul the country’s energy sector.
The order introduces a novel incentive framework that rewards oil and gas operators who achieve verifiable cost savings based on annual industry benchmarks.
These benchmarks, which will be published by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), will be tailored to operational terrains, onshore, shallow water, and deep offshore, to reflect the diverse cost profiles across Nigeria’s upstream landscape.
“This Order is a signal to the world: we are building an oil and gas sector that is efficient, competitive, and works for all Nigerians,” Tinubu declared while announcing the policy. “It is about securing our future, creating jobs, and making every barrel count.”
The Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) introduces performance-based tax incentives for upstream operators and is expected to play an instrumental role in attracting investment, driving development and unlocking greater value from the country’s oil and gas resources.
“This recent executive order is a testament to Nigeria’s commitment to strengthening its regulatory landscape, improving fiscals and supporting revenue generation across the oil and gas industry,” said NJ Ayuk, Executive Chairman of the AEC.
According to Ayuk, the order is expected to play a significant role in attracting new investment into the country at a time when national production goals require greater capital and technology injection.
“The Upstream Petroleum Operations Cost Efficiency Incentives Order (2025) positions the country as a globally competitive hydrocarbon market,” Ayuk stated.
The 2025 Executive Order is widely seen as an extension of the sweeping structural reforms initiated in 2024, which received strong praise from both local and international stakeholders in the energy sector.
The 2024 directives delivered key improvements, including enhanced fiscal terms, reduced project execution timelines, and updated local content rules aligned with global best practices, strengthening investor confidence in Nigeria’s oil and gas industry.
Highlighting the importance of economic viability, Tinubu stated, “Nigeria must attract investment inflows, not as an act of charity, but because investors recognise real and lasting value.”
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Meeting OPEC Quota
The rise in rig activity comes as Nigeria’s crude oil production, excluding condensates, hit 1.505 million barrels per day (bpd) in June, meeting its OPEC quota for the second time this year.
This figure marks a 3.58 percent increase from the 1.453 million bpd recorded in May, representing the highest output level since January and a crucial step in the country’s bid to stabilise its oil revenue.
Meeting the OPEC quota is a significant achievement for Nigeria, which has frequently fallen short of its allocated production ceiling in recent years.
This success is expected to boost the nation’s foreign exchange earnings and provide a much-needed boost to the national budget, which is heavily reliant on oil revenue.
However, despite this positive development, Nigeria still aims for a higher production benchmark of over two million barrels per day (bpd), as set in its 2025 budget.
Nigeria’s Production target
The Nigerian National Petroleum Company (NNPC) Limited has indicated plans to lobby OPEC for a 25 percent increase in its quota by 2027, citing growing refinery capacity, including the recently commissioned Dangote Refinery, and improved production capabilities.
Bashir Ojulari, the Group CEO of the state-owned oil company, said in an Argus Media report that plans would be included in the upcoming talks over updated country capacities.
“We believe that with the increased demand being created in-country, we are now in a better position to also seek from OPEC to increase our production quota,” Ojulari said.
Nigeria recently commissioned the 650,000 bpd Dangote refinery, while 500,000 bpd of modular refining capacity are at “different stages of progress,” Ojulari said.
“You can imagine, over the next two years, we will be talking of (additional) refining capacity of around 1 million bpd of just Nigerian local consumption,” Argus quoted Ojulari as saying.
Nigeria has struggled in recent years with declining production due to pipeline vandalism, oil theft, and regulatory uncertainties. However, recent steps, including improved fiscal terms under the Petroleum Industry Act and a crackdown on illegal refineries, have helped stabilise the sector.
