Nigeria’s oil revenue outlook is under renewed pressure following a steep fall in drilling activity, with the country reportedly losing five active oil rigs within a single month.
The decline has raised concerns over future crude output, government revenue performance, and overall fiscal stability, especially as Nigeria continues to rely heavily on petroleum earnings to fund public expenditure.
A report by the African Energy Council (AEC), an industry think tank, showed that Nigeria’s active rig count dropped from 17 in March 2026 to 12 in April 2026—representing a near 30 per cent decline in just one month. The group described the trend as a signal of weakening upstream investment and reduced exploration activity.
Rig count is widely regarded as a key barometer of oil and gas exploration activity, as it reflects the level of drilling operations underway and often serves as an early indicator of future production levels.
The downturn comes at a critical period for Nigeria, which is already struggling to meet its crude oil production targets while depending on oil revenues to finance a significant share of government spending.
According to the AEC report, the drop in rig activity poses a direct risk to the Federal Government’s 2026 production benchmark of 1.84 million barrels per day (bpd), particularly as actual output stood at about 1.48 million bpd in April 2026.
The report also highlighted discrepancies in industry data, noting that the Nigerian Upstream Petroleum Regulatory Commission reported 31 active rigs during the period, while the Organization of the Petroleum Exporting Countries placed Nigeria’s figure at 12 rigs. The AEC attributed the variation to differing classification methods, including whether standby rigs are counted as active.
Despite the differences, both datasets point to a clear downward trajectory in drilling activity.
The council warned that with only 12 rigs active in April, Nigeria’s future production capacity could come under severe strain if urgent corrective measures are not implemented. It also noted that rig count had already declined from 15 in 2024 to 13 in 2025, suggesting a sustained slowdown in upstream operations.
The report further cautioned that the weakening drilling environment reflects deeper structural challenges rather than a short-term cycle. It estimated that revenue losses could exceed $3.1 billion, while describing the gap between long-term production ambitions and actual field activity as widening.
Nigeria’s upstream oil sector is dominated by the state energy company, the Nigerian National Petroleum Company Limited, which remains central to production and investment planning.
On the fiscal side, rising pressure on oil earnings adds to broader economic concerns. Oil is estimated to account for about 60 per cent of government revenue, meaning any sustained production decline could widen budget deficits and increase borrowing needs.
Data from the Debt Management Office showed that total public debt rose from N152.40 trillion in June 2025 to N153.29 trillion by September 2025, reflecting an increase of N893.87 billion within a quarter. In dollar terms, debt climbed from $99.66 billion to $103.94 billion over the same period.
The government also raised N2.69 trillion from the domestic bond market in the first quarter of 2026 through a mix of competitive and non-competitive issuances.
The AEC attributed the decline in drilling activity to several structural factors, including ageing oil fields, persistent crude theft, pipeline vandalism, regulatory bottlenecks, and reduced foreign investment following the divestment of international oil companies from onshore assets.
