Nigeria’s oil and gas companies have a financial advantage they should be using to expand their businesses. Operating profits are stronger, cash flows are healthy, and access to credit has improved. Yet, investment in new capacity is not keeping pace.

In the first half of 2026, real growth in Nigeria’s crude petroleum and natural gas sector slowed to 2.6 percent, down from 10.7 percent in the corresponding period of 2025. Average crude oil production also slipped to 1.63 million barrels per day, compared with 1.68 million barrels a year earlier.

The figures, contained in a report by the Nigerian Economic Summit Group (NESG), titled From Crude Extraction to Value-Added Petroleum, point to a challenge beyond production levels. Although business conditions have improved, companies are not committing enough resources to strengthen the industry’s productive capacity.

For a sector that requires expensive equipment, extensive infrastructure and long development timelines, the gap could affect its ability to sustain growth and take advantage of emerging opportunities.

The money is there, but investment is lagging

The NESG report presents a relatively strong picture of the financial health of energy businesses. Its Overall Business Conditions Index rose from 93.5 in 2024 to 113.2 in 2025, before settling at 108.6 in the first half of 2026. A reading above 100 indicates expansion.

Operating profitability, cash flow and access to credit recorded particularly strong performances. The Operating Profit Index reached 119.3, while the Cash Flow Index stood at 130.5. Access to Credit also remained expansionary at 120.9.

Investment, however, moved in the opposite direction. Its index fell from 95.7 in the first half of 2025 to 92.7 in the first half of 2026, remaining below the 100-point benchmark.

These figures are indices, not percentages of company earnings or actual investment spending. They nevertheless highlight the difference between businesses performing well financially and their willingness or ability to commit money to new projects.

In petroleum, having cash available does not automatically make a new field, processing plant or pipeline commercially attractive. Companies must consider development costs, expected returns, infrastructure and the risks involved in operating over several years.

The NESG identified inadequate electricity supply as the leading constraint facing energy businesses, followed by economic uncertainty. These challenges increase operating costs and make long-term investment decisions more difficult, even for companies reporting stronger financial results.

Nigeria’s petroleum market is changing

The investment challenge comes as Nigeria’s petroleum export mix is gradually moving beyond crude oil. The Dangote Petroleum Refinery’s growing contribution to domestic refining and petroleum product supply has added another dimension to the country’s petroleum business.

According to the NESG report, crude oil accounted for 71.4 percent of Nigeria’s total exports in 2024. Its share declined to 55.7 percent in 2025 and 52.9 percent in the first half of 2026. Meanwhile, non-crude petroleum exports increased from 16.9 percent to 29.8 percent and then 32 percent over the same periods.

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This points to a growing contribution from petroleum products in export trade. However, the report cautioned that the figures do not establish how much of the change represents additional value created locally, rather than a change in the composition of exports.

That distinction matters. Operating a refinery is only one part of building a stronger petroleum value chain. Nigeria also needs investment in crude production, gas gathering, processing facilities, pipelines, storage and the infrastructure connecting these operations.

A stronger domestic refining industry can create opportunities for engineering companies, equipment suppliers, logistics operators and other service providers. But these businesses need reliable infrastructure, consistent feedstock supply and sufficient capital to expand their operations.

Without investment across these supporting activities, increased petroleum product exports may not translate into deeper local participation or stronger industrial capacity.

The next investment cycle will matter

There are signs that major projects remain on Nigeria’s investment agenda. In August 2026, the Nigerian Upstream Petroleum Regulatory Commission said it had approved more than US$57bn in Field Development Plans since 2024, with some progressing to Final Investment Decisions.

The commission also projected that 22 major offshore projects expected between 2026 and 2030 could attract between US$30 and US$50 billion in investment.

These figures point to substantial opportunities in the upstream industry, but approved development plans and projected investments are not the same as completed projects or capital already deployed. Their economic impact will depend on whether operators move ahead with execution.

For oil companies, the decision to invest involves weighing development costs against expected returns, infrastructure reliability and the commercial prospects of their assets. Strong cash flow may improve their ability to fund projects, but it does not remove these considerations.

Nigeria’s petroleum sector is competing for capital at a time when investors are becoming more selective about where they commit money. The country must therefore make its projects commercially attractive and address the operating constraints that discourage expansion.

The NESG findings expose a gap between financial performance and productive investment. Closing it will be essential if Nigeria wants its petroleum industry to do more than generate profits from existing operations. The next measure of progress should be whether those profits help build new capacity, strengthen local businesses and support lasting growth across the value chain.

Cynthia Nwanonyiri