The Nigerian National Petroleum Company Limited (NNPCL) may see its oil and gas production output drop by 50% by 2030, according to a new analysis by global energy consultancy Wood Mackenzie.
The report warns that structural and operational issues threaten to derail Nigeria’s upstream ambitions unless urgent reforms are enacted.
Limited Control and Weak Portfolio Threaten NNPCL Output
In its latest podcast, A New Era for NNPC and Nigeria’s Upstream Oil & Gas Sector, Wood Mackenzie highlighted the weaknesses in NNPCL’s portfolio using its proprietary benchmarking tool. International oil companies and indigenous partners drive the company’s production, as it holds mostly non-operated assets, analysts observed.
Unlike national oil companies with full operational control, NNPCL has limited ability to influence investment decisions. Third-party capital flows and shifting external priorities threaten to reduce NNPCL’s output, limiting its control over production risks.
Production to Peak in 2026, Then Decline Sharply
Although short-term output may improve, Woodmac forecasts that Nigeria’s oil production will peak by 2026 and then enter a sustained decline. By the late 2030s, total output could fall by half, primarily due to sub-commercial assets and the absence of new high-impact projects in the pipeline.
“NNPCL holds vast reserves, but many of them are not commercially viable. Without new developments, there’s no path to sustainable growth,” said Ian Thom, Research Director for Upstream at Wood Mackenzie.
Infrastructure and Cost Challenges Compound Pressure
The NNPCL output drop is also linked to longstanding infrastructure deficits. For example, the OB3 gas pipeline, which could connect Eastern Delta reserves to broader markets, has faced years of delay. Woodmac notes that without critical infrastructure like OB3, gas development remains limited and uncompetitive.
In addition, NNPCL’s operations suffer from high costs, including oil theft, insecurity, and inefficient policies. According to the report, the company’s cost base is significantly higher than that of its global peers, making its projects less attractive to investors.
Fiscal Uncertainty and Investor Reluctance
Despite bold targets set by President Bola Tinubu—including raising oil output to 3 million barrels per day by 2030 and attracting $60 billion in investment—Woodmac argues that fiscal instability and poor project economics may keep investors on the sidelines.
“If NNPCL cannot improve cost competitiveness and regulatory certainty, major investment will remain elusive,” said Mansur Mohammed, Head of West Africa Upstream Content at Wood Mackenzie.
Deepwater Fields Offer Hope but Financing Remains Key
With international oil companies pulling back from Nigeria’s onshore and shallow water assets, the upstream sector is shifting to deepwater. Projects like Bonga North, which secured a Final Investment Decision in 2023, represent the best hope for reversing the projected NNPCL output drop.
However, Woodmac warned that future joint ventures will require NNPCL to finance operations independently, as partners like Oando, Seplat, and Renaissance are unlikely to continue past carry arrangements.
Gas Potential Undermined by Poor Infrastructure
Nigeria holds one of Africa’s largest gas reserves, especially in the Niger Delta. Processing and transport bottlenecks limit the commercial viability of less than 20% of the remaining volumes.
“Gas infrastructure needs urgent attention. The OB3 pipeline could be a game changer if completed,” the analysts stated.
Time for Urgent Upstream Reforms
In summary, NNPCL output drop by 2030 is not inevitable—but without aggressive project development, better fiscal terms, and improved infrastructure, the trend is unlikely to reverse.
Wood Mackenzie’s experts concluded that Nigeria’s upstream future hinges on timely final investment decisions (FIDs), private sector capital inflow, and clear policy direction.
Without these, NNPCL could face a future of declining relevance in the global energy landscape.
