Nigeria Struggles With 220 Abandoned Oil Blocks Amid Debt And Crude Shortages.
Nigeria, Africa’s leading oil producer, is confronting a major hurdle with 220 undeveloped oil blocks scattered across its onshore and offshore basins, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). This issue coincides with a rising debt crisis and ongoing crude oil shortages that are crippling local refineries, highlighting a stark contrast between Nigeria’s immense energy potential and its current production challenges, which threaten the nation’s economic stability.
The NUPRC data indicates that the deep offshore terrain holds the most unlicensed blocks, with 59 yet to be awarded. These blocks, situated in technically demanding and capital-intensive regions, represent significant untapped potential. The Benue Trough follows with 41 open blocks, and the Chad Basin has 40. The Sokoto Basin contains 28 unallocated blocks, while the Bida Basin has 16. Even in established regions like the offshore Niger Delta, a cornerstone of Nigeria’s oil production, seven blocks remain idle. The Anambra Basin and onshore Niger Delta have 13 and eight unlicensed blocks, respectively.
As of January 2025, deepwater terrains accounted for roughly 19% of Nigeria’s oil reserves and 12% of its gas reserves, underscoring their vital role in the energy sector. However, industry experts note that the failure to develop these blocks is worsening Nigeria’s economic difficulties. The country’s public debt surged to N149.39 trillion in the first quarter of 2025, a 22.8% rise from N121.67 trillion the previous year, according to the Debt Management Office. The absence of revenue from these idle assets has forced Nigeria to rely heavily on borrowing, while chronic crude shortages have led refineries, such as the Dangote refinery, to import up to 10 million barrels of feedstock from the United States in July.
The NUPRC has taken steps to tackle the problem, recently awarding 24 blocks in the 2022/2023 deepwater mini bid round and the 2024 licensing round. These awards reflect Nigeria’s ambition to tap into its estimated 37.5 billion barrels of crude oil and 209.26 trillion cubic feet of natural gas reserves. Gbenga Komolafe, NUPRC’s chief executive, has stressed the importance of transparent bidding processes to attract both local and international investors. The commission is also preparing a 2025 licensing round targeting undeveloped blocks, with a focus on natural gas development to align with global sustainability goals.
Despite these efforts, significant obstacles remain. Oil theft and pipeline vandalism have long plagued Nigeria’s upstream sector, resulting in production losses of around 165,000 barrels per day in the first five months of 2023. These issues, combined with underinvestment, have positioned Nigeria as the weakest performer in crude oil production within the OPEC+ alliance. Major international oil companies, including Shell, ExxonMobil, and Chevron, have been divesting from Nigeria’s shallow water fields, citing concerns over transparency, crude theft, and the global shift towards renewable energy. The Petroleum Industry Act (PIA) of 2021 aimed to boost investment, but analysts highlight that unclear governance and regulatory frameworks continue to discourage investors.
The Nigerian government is working to address these challenges. Mele Kyari, group chief executive of the Nigerian National Petroleum Company (NNPC), attributes a recent production increase to 1.8 million barrels per day in December 2024—up from 1.3 million earlier in the year—to enhanced security measures and partnerships with joint venture partners. The government aims to increase output by an additional 1 million barrels per day by December 2026 through intensified efforts to combat oil theft and boost investment. Komolafe noted that losses from oil theft have dropped by 5,000 barrels per day, with current production at approximately 1.75 million barrels per day.
Industry observers are cautiously optimistic, suggesting that sustained security improvements and transparent licensing could unlock Nigeria’s vast hydrocarbon resources. However, corruption, ethnic unrest in the Niger Delta, and the global move away from fossil fuels present formidable challenges. With oil revenue accounting for 90% of Nigeria’s foreign exchange earnings and half of federal revenue, the urgency to resolve these issues is clear.
As Nigeria navigates this complex terrain, strategic decisions will be crucial to reducing its reliance on oil and promoting economic diversification. The success of forthcoming licensing rounds and security initiatives will be pivotal in determining whether Nigeria can harness its untapped energy wealth to address its economic challenges.
