Global provider of data and analytics solutions for the energy and natural resources sectors, Wood McKenzie, has predicted that oil and gas production from the Nigerian National Petroleum Company Limited (NNPCL), could be halved by the late 2030s given lot of sub-commercial assets portfolio operated by the firm.

The submission was made as Woodmac’s team of experts, including its Research Director, Upstream, Ian Thom; Director, Corporate Research, Neivan Boroujerdi and Head of West Africa Upstream Content, Sub-Saharan Africa Oil & Gas, Mansur Mohammed, reviewed the status of the company after the exit of its erstwhile Group Chief Executive Officer, Mele Kyari.

In a podcast themed: “A New Era for NNPC and Nigeria’s Upstream Oil & Gas Sector”, Woodmac said its analysis was based on the deployment of its new upstream benchmarking tool, which provides ‘customisable views’ of key operational and financial metrics.

It stated that the review was against the backdrop of the recent ambitious targets set for the NNPC board by President Bola Tinubu to achieve by 2030, including attracting $60 billion investment to the sector, raising oil output to 3 million barrels daily, gas to 10 BCF per day and 500,000 barrels per day of NNPC refining capacity.

“What’s unique to NNPC is (that) unlike a lot of the other National Oil Companies (NOCs) within our corporate universe and around the world, most of its production and its assets are non-operated.

“So it’s got big ambitions to grow its business, to grow the Nigerian upstream sector, but a lot of that will be reliant on a lot of other IOCs around the world, indigenous producers, where assets will have to compete for capital within a wider portfolio.

“And if we look at production in a little bit more detail, we can see that it is growing production in the short term. That’s set to peak in 2026. But clearly, there are challenges in the longer term. As we move further out towards the late 2030s, production could be half of what it is today.

“So there is a lack of longevity in the portfolio. It needs more projects in the pipeline. And if we look at the reserve base, what you see is that NNPC has a huge amount of resources within its portfolio, but most of those resources are still sub-commercial,” the global research and consultancy firm stated.

As of last November, the company announced that achieved production of 1.8 million barrels of crude oil per day.

Data sourced by Channels Television from the Organization of the Petroleum Exporting Countries Monthly Oil Market Report for May, showed that NNPCL has maintained a production of 1.4 million barrels per day since the fourth quarter of last year till April 2025.

However, last month, a subsidiary of the Nigerian National Petroleum Company Limited (NNPC), NNPC Exploration and Production Limited (NEPL), said it plans a daily production increase from its current production level of 370,000  barrels per day to 550,000 barrels per day by 2027.

To achieve this feat, Managing Director of NNPC Exploration and Production Limited (NEPL), a subsidiary of the NNPCL, Nicolas Foucart, disclosed that the company may need, on average, about $4 billion on an annual basis for the next five years.

Again, upon assumption of office, the new group chief executive officer of the state oil company, Bashir Ojulari, pledged to attract sectoral investments worth $30 billion and $60 billion by 2027 and 2030, respectively.

Ojulari said the company would raise crude oil production to over two million barrels daily, sustained through 2027 and attain three million by 2030.

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On what the NNPCL can do to recover some of its resources, Woodmac noted that whatever the company does will likely be hobbled by challenges in terms of commercialising gas, infrastructure constraints and inability to monetise its resources.

“NNPC is naturally going to be very domestically focused, at least in the short to medium term. So it has that kind of longevity challenge. Another challenge the business has is on the cost side.

“Here we’re bringing up operating costs, firstly on a sort of absolute basis,  but then also on an OPEX per BOE, you see that NNPC does have a higher operating cost than a lot of its other companies that were shown in its peer group.

“And we know of some of the above-ground risks in Nigeria, loss of barrels, local content legislation, all of that adds to a higher cost base. It’s similar to Sonangol (Angola). And if we’re thinking about these companies being IPO (Initial Public Offer) ready, that is something that it has to address

“That’s particularly pertinent at the moment with a lot of uncertainty around tariffs and oil prices. That sort of short-run marginal cost of production is going to become increasingly important for investors,” the Woodmac panelists said.

However, deploying its upstream lens platform, which showed Nigeria’s overall production by water depth, the organisation said the divestment of Nigeria’s oil majors away from onshore shallow water has redefined the landscape in Nigeria.

“The majors are now focused in the deep water, and that’s where we would see their projects. Attention will now focus on indigenous companies who operate the joint ventures, mainly Oando, Renaissance, and Seplat. And financing will be the key hurdle they need to scale.

“For NNPC, it holds up to 60 per cent in these joint ventures, and they will need to find alternative financing options because the indigenous companies will unlikely continue the ‘carry arrangements’ NNPC enjoyed when the majors operated the Joint Ventures (JVs). So financing onshore will be key,” Woodmac explained.

The panel agreed that Nigeria has significant gas resources spread around the Niger Delta, but developing them has remained a challenge.

”But developing gas in Nigeria has always been a challenge. And we consider less than 20 per cent of the overall remaining volumes as commercial. This is largely due to limited infrastructure for processing and transporting gas from the fields to the markets.

“For example, the OB3 pipeline has been delayed for many years. And that is meant to connect the fields in the Eastern Delta to domestic markets in Lagos and the Western Delta. When it comes on, that’s when we’re able to see more gas developments progress in Nigeria,” the Woodmac analysts pointed out.

It, however, acknowledged the huge potential in the deep water, stressing that Final Investment Decisions (FIDs) and accelerating project development will play a major role in overall production growth.

“And this is because the deep water holds a significant scale in undeveloped resources. Bonga North took FID last year, and it is significant because it was the first deep water project to get approval since 2013,” it added.