Nigeria’s upstream oil sector is showing fresh signs of strain, with exploration activity dropping sharply by 45 per cent in February 2026 — a development that raises new concerns about the country’s long-term production outlook.
Data from the Nigerian Upstream Petroleum Regulatory Commission shows that rig count — a key barometer of exploration intensity — plunged from 40 in January to just 22 in February. This steep decline points to a significant slowdown in drilling and field development activities within a single month.
While the regulator did not give a specific explanation, industry insiders attribute the drop to delayed investment decisions, contract negotiations, and a temporary pause in field operations. The numbers suggest not just reduced activity, but a cautious wait-and-see approach among operators.
Further breakdown of the data reveals a worrying trend — inactive capacity is rising. Standby rigs more than doubled from 11 to 25, even as total rig count remained unchanged at 72. This indicates that while infrastructure exists, it is largely underutilised.
Energy analysts say the lull may be temporary. Ongoing contract discussions are expected to unlock new drilling campaigns in the coming months, potentially triggering a rebound in the second quarter of the year.
Industry stakeholders are also sounding the alarm on the need for aggressive upstream investment. Without sustained exploration, Nigeria risks stagnating reserves growth, which directly impacts future production capacity and revenue generation.
Regulators, however, insist reforms are already taking effect. The enforcement of the “drill or drop” provision under the Petroleum Industry Act is forcing operators to either develop allocated assets or relinquish them, opening the door for more serious and committed investors.
This policy shift is already attracting interest, with about 50 oil blocks currently on offer in the 2025 licensing round. Early indications point to strong investor appetite, suggesting confidence may be returning — albeit gradually.
