Nigeria’s $50b energy investment gap: Refining gains, gas infrastructure, supply risks

By Ambrose Nnaji

Nigeria needs between $30 billion and $50 billion in fresh oil and gas investment by 2030 to expand processing capacity, boost gas-based industries, increase liquefied petroleum gas (LPG) supply and commercialise flare gas, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said.

The Authority also disclosed that petrol imports fell by about 54 per cent in a year, from 22.1 million litres per day in September 2025 to 10.2 million litres per day in September 2026, as domestic refineries increased their contribution to the country’s fuel supply.

Speaking ahead of the OTL Africa Downstream Energy Week 2026, in Lagos, the Authority Chief Executive, Rabiu Umar, said domestic refineries supplied approximately 74 per cent of petrol received into the market in September, compared with about 44 per cent in September 2025.

The figures highlight the growing contribution of local refining to Nigeria’s fuel supply, although the regulator warned that rising exports, inadequate strategic reserves and dependence on a major refinery present challenges to sustaining energy security.

Umar said Nigeria’s refining expansion had helped the country withstand international supply pressures, including disruptions associated with conflict in the Gulf and crude oil prices approaching $100 per barrel.

“Secure energy is energy we produce, move, store and price well ourselves,” he said, adding that the economic benefits would be greater when more value from the country’s energy resources remained within domestic and African economies.

However, the NMDPRA chief stressed that increased local production must be accompanied by adequate inventories, diversified supply sources, reliable crude feedstock and investment in transportation and storage infrastructure.

Despite the growth in domestic refining, the Authority said petrol consumption exceeded fresh supply in September, with the shortfall met from existing stocks.

According to the presentation, petrol supply averaged 38.7 million litres per day against consumption of 44.4 million litres per day.

Petrol stock cover stood at approximately 24 days, below the 30-day threshold, while cooking gas inventories were tighter, at about 16 days.

Diesel and aviation fuel stocks were more comfortable, with cover of approximately 50 days and 53 days respectively.

The Authority is targeting 30 to 45 days of product sufficiency as part of measures to strengthen the country’s capacity to withstand international price shocks, supply disruptions and national emergencies.

It plans to operationalise a National Strategic Stock programme through a pilot involving the Nigerian National Petroleum Company Limited (NNPC Ltd) at designated depots in Ibadan, Enugu and Suleja.

The initiative is expected to provide an additional buffer against disruptions and improve the country’s capacity to respond to sudden changes in fuel supply.

The regulator also plans to measure actual consumption at filling stations to improve demand forecasting and ensure that supply planning reflects market realities.

Umar acknowledged that domestic petrol volumes fell in September from their August peak as refinery exports increased.

He said the Authority would continue working with refiners and traders to ensure that growing exports did not undermine domestic availability.

The NMDPRA also reaffirmed that import licences would remain available to qualified operators under published, merit-based criteria, signalling that the expansion of local refining would not automatically exclude fuel importers from the market.

The presentation also highlighted the growing role of domestic refineries in supplying diesel and aviation fuel.

Domestic refineries accounted for approximately 93 per cent of diesel receipts in September, although total diesel receipts fell to 8.7 million litres per day, their lowest level in 13 months.

The Authority attributed the decline partly to high prices weighing on imports and domestic evacuation, adding that the trend required close monitoring.

Aviation turbine kerosene receipts, however, rose to 3.3 million litres per day in September, six per cent above August’s level.

The regulator said the expansion of domestic refining could reduce exposure to external supply disruptions and bring fuel supply closer to local consumers, including airlines and industrial users.

For businesses, the sustainability of these gains will depend on reliable product availability, competitive pricing and efficient transportation from refineries to consumption centres.

The NMDPRA said active domestic refining capacity had increased to approximately 682,000 barrels per day, compared with about 5,000 barrels per day in 2021.

The LPG market has also expanded, with supply rising by 50 per cent from 1.2 million metric tonnes in 2021 to 1.8 million metric tonnes.

The number of LPG depots increased from 28 to 35, while the number of compressed natural gas (CNG) compression facilities rose from 17 to 43.

CNG and liquefied natural gas autogas stations increased from 16 to 101 over the period, while gas distribution infrastructure expanded to 10 licensed operators, covering 692 kilometres and attracting reported investment of $639 million.

The Authority said the sector had avoided nationwide supply disruptions since deregulation, while the quality of petrol supplied in the country had improved to meet the 50 parts per million sulphur limit.

It added that monthly market data was being published to improve transparency and provide industry operators with a common basis for assessing market developments.

The NMDPRA, however, does not set pump prices, which remain a major concern for households and businesses.

Its stated priorities include expanding supply, promoting fair competition, improving product quality and ensuring that consumers have access to reliable market information.

Beyond refining, the regulator identified gas processing, transportation, fertiliser production and LPG supply as major investment opportunities.

Nigeria has approximately 215 trillion cubic feet of gas reserves and 37 billion barrels of crude oil reserves, according to the presentation.

Yet the country uses only about 52 per cent of its installed gas processing capacity of 16.2 billion cubic feet per day, leaving considerable scope for investment in infrastructure and utilisation.

The NMDPRA said the country’s gas sector would require additional capital to support industrial expansion, improve energy access and commercialise resources that are currently wasted through flaring.

Major infrastructure projects include the Ajaokuta-Kaduna-Kano (AKK) pipeline, the Oben-Obiafu-Obrikom (OB3) pipeline and the ELPS midline compressor.

The OB3 pipeline and ELPS midline compressor were reported to be nearing completion, while the AKK pipeline was more than 80 per cent complete as of September 2026.

When the relevant projects become operational, gas transportation capacity is expected to increase from 2.2 billion cubic feet per day to 4.2 billion cubic feet per day.

The expanded network is expected to improve the movement of gas from southern production areas to northern markets, supporting power generation, manufacturing and other industrial activities.

The regulator also highlighted investment opportunities in depots, jetties, coastal shipping and the rehabilitation of product pipelines through public-private partnerships.

It said the Midstream and Downstream Gas Infrastructure Fund would form part of the mechanisms for supporting infrastructure development.

Despite growth in the LPG market, demand continues to exceed supply.

The Authority estimated daily LPG consumption at 5,200 tonnes, against supply of approximately 4,700 tonnes, representing a demand-supply gap of about 500 tonnes per day.

The regulator said the imbalance presented opportunities for investors in processing, storage, distribution and transportation infrastructure.

It also identified expanding access to LPG as an important component of the country’s energy transition, particularly in replacing traditional cooking fuels.

The NMDPRA’s target is to increase LPG market capacity from 1.8 million metric tonnes annually to four million metric tonnes by 2030.

Other planned expansions include increasing Nigeria LNG’s capacity from 22 million to 30 million metric tonnes annually through Train 7, and expanding Indorama’s fertiliser capacity from 4.38 million to 5.84 million metric tonnes annually.

The Authority said these projects could strengthen domestic value addition, create jobs and support regional trade if backed by adequate infrastructure and predictable regulation.

As part of its reform agenda, the Authority announced the launch of Revision 2 of the Nigerian Gas Transportation Network Code at the opening ceremony of OTL Africa Downstream Energy Week on October 26.

The code establishes rules governing access to gas transportation infrastructure, capacity booking, nominations, network balancing, measurement and gas quality.

The revised framework is intended to provide clearer and more predictable rules for companies transporting gas through the network.

According to the presentation, the code builds on the original framework introduced in 2020 and the first revision in 2024.

The Authority said the latest revision was designed to improve access to the gas network, support transparent and cost-reflective transportation tariffs, and strengthen measurement at entry and exit points.

It also reported that imbalance on the Western Network had fallen by about 30 per cent in the first half of 2026.

The regulator said the revised framework could provide an initial basis for developing rules for a proposed trans-African pipeline network, helping to improve predictability for shippers, investors and partner countries.

The success of the framework will depend on effective implementation, transparent access arrangements and the confidence of companies investing in gas transportation and related infrastructure.

The Authority said it had signed a memorandum of understanding with the Federal Competition and Consumer Protection Commission to coordinate enforcement and improve consumer protection.

It has also consulted stakeholders on draft regulations aimed at preventing anti-competitive practices in the midstream and downstream petroleum sectors.

On product quality, the regulator said it was upgrading its laboratories to international ISO standards and working with Bureau Veritas and Ace Energy and Power Solutions towards establishing a National Reference Laboratory.

The Authority said the initiatives formed part of Project NEXUS, its programme to strengthen regulatory effectiveness through a firm, fair and fast approach.

It also plans to expand gas distribution licensing and improve transparency through regular publication of market data.

The NMDPRA said Nigeria’s progress in domestic refining would have greater economic value if supported by stronger regional cooperation.

Despite producing approximately five million barrels of crude oil per day, Africa imports about 70 per cent of the refined petroleum products it consumes, according to figures cited in the presentation.

The Authority identified five priorities for improving the continent’s energy security: refining more African crude within Africa, developing shared infrastructure, harmonising regulations, mobilising African capital and coordinating strategic reserves.

It proposed a phased approach to regulatory convergence in West Africa.

The first phase, covering 2026 and 2027, would focus on enforcing the Economic Community of West African States’ 50 ppm fuel standard, establishing regional data-sharing arrangements and conducting joint product-quality checks at borders.

The second phase, covering 2028 and 2029, would prioritise mutual recognition of licences and certificates, common cross-border pipeline and storage rules, and the application of African Continental Free Trade Area arrangements to refined products.

By 2030, the proposed framework envisages coordinated regional strategic stocks, a pathway towards cleaner 10 ppm AFRI-6 fuels and a credible West African reference price.

Umar said regulatory convergence should not prevent individual countries from protecting their domestic markets.

He argued that a more integrated regional market could reduce duplication, improve supply resilience and create a larger commercial base for African refiners and infrastructure investors.

The Authority identified five priorities for the coming period: strengthening supply security, ensuring reliable crude feedstock, expanding infrastructure, attracting investment and improving transparency.

It said these would be pursued through strategic stock development, the Domestic Crude Supply Obligation, the Naira-for-Crude initiative, public-private partnerships and more efficient licensing.

Umar called on refiners to prioritise domestic supply, while urging marketers and logistics operators to invest in storage and maintain fair business practices.

He also appealed to financiers, host communities, security agencies and African partners to support the infrastructure and regulatory reforms required to strengthen the sector.

For Nigeria, the challenge is no longer simply to increase domestic refining. It is to ensure that higher production translates into reliable fuel availability, competitive markets, stronger industrial output and investment returns.

The regulator’s position is that the country’s expanding refining capacity and gas resources can support a more resilient energy market. Delivering that outcome, however, will require sustained investment, adequate strategic stocks, dependable infrastructure and rules that give businesses confidence to commit long-term capital.