Nigeria’s crude oil sector has demonstrated resilience and recovery, accounting for 52.60% of the nation’s total exports in the second quarter of 2025, according to the latest National Bureau of Statistics (NBS) report. The ₦11.97 trillion contribution from crude oil exports represents a crucial milestone for Africa’s largest petroleum producer as it navigates complex market dynamics, production challenges, and an evolving energy landscape shaped by the transformative Dangote Refinery operations.
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The NBS data shows Nigeria’s total exports reached ₦22.75 trillion during Q2 2025, with crude oil exports experiencing significant volatility throughout the first half of the year. While crude oil maintained its dominance in the export portfolio, the sector faced substantial headwinds, including a ₦3.18 trillion decline in the first six months of 2025 compared to the same period in 2024.
This complex picture reflects Nigeria’s ongoing transformation from a petroleum-dependent economy toward greater diversification, while simultaneously working to optimize its oil sector performance through improved security, enhanced production capacity, and strategic partnerships with emerging local refining capabilities.
Production Recovery Meets OPEC Quota Achievement
Nigeria’s oil production performance in 2025 marks a significant turnaround from years of underperformance. The country achieved its OPEC quota of 1.5 million barrels per day in June 2025, reaching 1.505 million bpd according to OPEC data. This achievement represents only the second time Nigeria has met its quota in 2025, following a similar performance in January.
The production recovery reflects sustained efforts by Nigerian authorities to address long-standing challenges including oil theft, pipeline vandalism, and infrastructure security. According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the country enjoyed 100% crude oil pipeline availability throughout June for the first time in years, contributing to the production surge.
Nigeria’s current production success positions the country strongly as it seeks a 25% increase in its OPEC quota to 2 million barrels per day by 2027. NNPC CEO Bashir Ojulari has outlined ambitious targets, aiming for 2.4 million bpd production capacity with a 2 million bpd quota target, including 1.7 million bpd of crude oil and 300,000 bpd of condensate output.
The production recovery has been supported by major oil company investments, with ExxonMobil planning to invest up to $1.5 billion in deepwater oil and gas exploration offshore Nigeria, while Shell and TotalEnergies expect to raise production over the next two years through new project developments.
Dangote Refinery Impact and Local Market Transformation
The emergence of the Dangote Refinery as Africa’s largest refining facility has fundamentally altered Nigeria’s petroleum sector dynamics. With current processing capacity of 550,000 barrels per day and plans to reach full 650,000 bpd capacity, the refinery represents a strategic shift from crude export dependence toward value-added processing.
Significantly, Dangote Refinery plans to transition to 100% Nigerian crude by the end of 2025, ending its reliance on imports from the United States, Brazil, Angola, Ghana, and Equatorial Guinea. Currently sourcing 53% of its crude locally as of June, this transition will redirect substantial volumes from export markets to domestic refining.
The refinery’s impact extends beyond crude consumption to refined product exports. Dangote has begun exporting gasoline to the United States, marking a historic milestone for Nigerian petroleum product exports. This development positions Nigeria as both a crude oil exporter and an emerging refined products supplier to global markets.
The refinery’s operations have also contributed to reduced fuel import dependency. Nigeria’s petrol import bill fell sharply to �N1.76 trillion in Q1 2025 from ₦3.81 trillion in the corresponding period of 2024, largely attributed to increased domestic supply from the Dangote facility.
Export Market Dynamics and Geographic Distribution
Nigeria’s crude oil export destinations reflect the country’s continued integration with global energy markets. According to NBS data, India remained the largest importer of Nigerian crude in Q1 2025, spending ₦1.41 trillion, followed by the Netherlands (₦1.36 trillion), France (₦1.28 trillion), Spain (₦989.5 billion), and the United States (₦779.3 billion).
Within Africa, South Africa led crude purchases at ₦704.7 billion, followed by Côte d’Ivoire (₦403.9 billion), Senegal (₦327.8 billion), and Ghana (₦50.5 billion), demonstrating Nigeria’s role as a regional petroleum supplier.
Interestingly, the United States has emerged as both an importer of Nigerian crude and a supplier of crude to Nigeria for the Dangote Refinery. US gross exports of crude oil to Nigeria reached 111,000 bpd in February 2025 and 169,000 bpd in March, marking the first time the United States became a net crude oil exporter to Nigeria during these months.
Trade Balance and Economic Impact
Nigeria’s merchandise trade performance in Q2 2025 demonstrates the country’s continued export orientation despite declining crude oil values. Total merchandise trade reached ₦38.04 billion, reflecting a 20.05% increase compared to ₦31.68 billion in Q2 2024, and a 5.59% rise from ₦36.02 billion in Q1 2025.
Exports accounted for 59.81% of total trade, indicating a 28.43% growth year-on-year and a 10.45% rise compared with Q1 2025. This export dominance helped Nigeria maintain a positive trade balance of ₦7.46 billion, marking a 44.31% increase from the previous quarter.
The strong trade balance performance occurred despite crude oil’s reduced share of total exports, which declined from 71.2% in Q2 2024 to 52.6% in Q2 2025. This shift reflects both absolute decreases in crude oil export values and growth in non-crude oil exports, indicating gradual economic diversification.
Non-crude oil exports valued at ₦10.78 billion accounted for 47.40% of total exports, while non-oil products contributed ₦3.05 billion or 13.39% of total exports. Other oil products showed strong performance, generating ₦4.48 trillion in Q1 2025, marking a 134.24% increase from ₦1.91 trillion recorded a year earlier.
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Sectoral Challenges and Security Improvements
Nigeria’s oil sector continues to face significant challenges despite recent production improvements. Oil theft remains a persistent problem, with estimates suggesting losses of 300,000-400,000 barrels per day, representing approximately $9-12 billion in annual revenue losses at current prices.
However, sustained government efforts to improve security and operational efficiency have yielded positive results. The implementation of the Petroleum Industry Act and the emergence of capable locally-led producers managing divested international oil company assets have contributed to production recovery.
Pipeline vandalism and infrastructure attacks have been reduced through enhanced security measures and community engagement programs. The achievement of 100% pipeline availability in recent months demonstrates the effectiveness of these security improvements.
Major international oil companies, including Shell, ExxonMobil, and Chevron, have divested significant onshore assets to local operators since 2021, creating opportunities for indigenous companies while maintaining offshore production operations through continued investment in deepwater projects.
Global Market Context and Price Dynamics
Nigeria’s export performance occurs within a complex global oil market environment characterized by geopolitical tensions, demand uncertainty, and evolving trade relationships. Current oil price levels of approximately $66-69 per barrel for WTI and Brent crude represent modest recovery from early 2025 lows but remain below the $85-90 range preferred by many OPEC+ members for fiscal sustainability.
The global market faces several challenges including economic slowdown concerns in major consuming nations, with US and European PMI indicators showing contraction. China’s economic performance and refinery operations significantly influence global oil demand patterns, affecting Nigeria’s export prospects.
OPEC+ production management strategies continue to influence global supply dynamics, with the organization maintaining production cuts to support price stability. Nigeria’s recent success in meeting its quota positions the country favorably for potential quota increase negotiations, though competition from other members seeking higher allocations remains intense.
Infrastructure Development and Investment Outlook
Nigeria’s petroleum sector infrastructure continues evolving through both public and private investments. The completion of the Dangote Refinery represents the largest single industrial investment in Nigeria’s history at over $19 billion, demonstrating confidence in the country’s petroleum sector potential.
Upstream infrastructure improvements include pipeline security enhancements, processing facility upgrades, and exploration activities in both onshore and offshore areas. The country operates 323 developed fields connected to 265 production processing stations, with oil and gas exported through 31 export terminals.
Future infrastructure developments include planned expansions of existing refineries, additional petrochemical facilities, and enhanced pipeline networks to improve production efficiency and reduce transportation costs. The government’s focus on attracting foreign investment and supporting local content development aims to strengthen the sector’s long-term competitiveness.
Diversification Progress and Non-Oil Growth
While crude oil maintains its dominant export position, Nigeria has made progress in diversifying its export base. Non-crude oil exports’ growth to 47.40% of total exports in Q2 2025 reflects this diversification effort, including agricultural products, manufactured goods, and other commodities.
The government’s economic diversification strategy emphasizes agriculture, manufacturing, and technology sectors to reduce fiscal dependence on oil revenues. Recent initiatives include agricultural export promotion programs, manufacturing incentives, and digital economy development projects.
Nigeria’s gas reserves present additional opportunities for export diversification, with the country being a member of the Gas Exporting Countries Forum (GECF) without production quotas, allowing unlimited gas commercialization and export development.
Outlook and Strategic Implications
Nigeria’s petroleum sector outlook remains cautiously optimistic despite ongoing challenges. The country’s ability to achieve OPEC quota compliance, coupled with major refinery operations and sustained infrastructure investments, positions the sector for potential growth.
Key factors influencing future performance include sustained security improvements, successful implementation of the Petroleum Industry Act, continued investment by international oil companies, and effective management of the Dangote Refinery operations.
The transition toward greater domestic crude oil processing through the Dangote Refinery represents a strategic shift that could reduce export dependency while creating value-added employment and foreign exchange earnings through refined product exports.
Nigeria’s success in achieving production targets and maintaining export competitiveness will significantly influence the country’s economic diversification efforts and long-term development trajectory. The petroleum sector’s performance remains crucial for government revenues, foreign exchange earnings, and overall economic stability.
As global energy markets continue evolving through the energy transition and changing geopolitical dynamics, Nigeria’s ability to optimize its petroleum resources while diversifying its economic base will determine the country’s success in achieving sustainable development objectives.
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By: Montel Kamau
Serrari Financial Analyst
16th September, 2025
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