Local companies’ acquisition of IOC assets to drive crude oil production growth

THE acquisition of onshore assets from International Oil Companies (IOCs) by local Nigerian firms is set to significantly impact the country’s crude oil production in 2025.

As indigenous companies take over assets previously managed by multinational oil giants, industry experts are optimistic about the potential for sustained growth in Nigeria’s oil production. This shift aligns with Nigeria’s broader goal of maximising oil revenues and maintaining its strategic position in the global energy market. The increasing participation of local players in the upstream sector is expected to redefine the nation’s oil and gas landscape.

Specifically, dealers from CSL Stockbrokers stated that the recent oil bid round, where local companies acquired onshore assets from IOCs, has bolstered the outlook for crude oil production. According to the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), crude oil production, excluding condensates, rose by 3.6 percent in January 2025 to 1.54 million barrels per day (mbpd), up from 1.48 mbpd in December 2024. This marks the highest production level since March 2021 and represents the first time Nigeria has surpassed OPEC’s quota of 1.5 mbpd in several months. Including condensates, production rose by 69,920 barrels per day, increasing from 1.68 mbpd in December 2024 to 1.74 mbpd in January 2025.

However, Nigeria’s oil industry continues to grapple with challenges such as widespread crude oil theft in the Niger Delta, aging oil fields with declining reservoir performance, poor infrastructure maintenance leading to frequent shutdowns, and reduced upstream investments that constrain capacity expansion and efficiency. Despite these hurdles, production data for January 2025 revealed positive trends at several terminals.

According to CSL, the Forcados Terminal recorded steady growth, with output rising by 4.3 per cent to 8.86 million barrels from 8.49 million barrels in December 2024. Similarly, the Bonny Terminal posted a 4.6 percent increase, reaching 8.14 million barrels compared to 7.78 million barrels the previous month. The Escravos Terminal achieved the most significant gain, surging by 14.6 percent to 4.48 million barrels. However, some terminals experienced declines. The Odudu Terminal saw a 5 percent drop in output, falling to 2.33 million barrels from 2.45 million barrels in December 2024, while the Bonga Terminal recorded the sharpest decrease, with production dropping by 11.5 percent to 4.02 million barrels from 4.54 million barrels.

Nigeria’s persistently low oil production has resulted in substantial revenue losses and a sharp decline in foreign exchange (FX) supply, as crude oil sales remain the country’s primary FX source. To address these issues, the government has introduced proactive measures such as the Audit of Upstream Measurement Equipment and Facilities (AUMEF). This initiative aims to resolve critical bottlenecks, including outdated measurement equipment, the absence of a comprehensive database of installed facilities, and the lack of real-time production monitoring.

The Nigerian government is committed to increasing oil output from 1.5 mbpd to over 2 mbpd in 2025. However, achieving this ambitious target remains uncertain, with projections suggesting an average production level of 1.66 mbpd for the year.

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