Nigeria’s oil economy is navigating a period of intense volatility as the year 2025 draws to a close. A combination of infrastructure failure and shifting global demand has pushed exports to a monthly low, while the Dangote Refinery has emerged as an unprecedented counterweight, absorbing local crude at record volumes.
The Export Crisis: Sabotage and Surplus
The backbone of Nigeria’s public finance is under severe strain due to two main factors:
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The Escravos–Lagos Explosion: A major explosion on the Escravos–Lagos Pipeline System (ELPS) on December 10, 2025, near Gbaramatu Kingdom, Delta State, forced a significant drop in pressure and the isolation of key sections. This disruption has caused December exports to plummet to an average of 1.2 million barrels per day (b/d).
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The “Unsold” Backlog: Compounding the physical disruption is a weak global market. As of late December, approximately 20 million barrels (roughly 20 out of 48 planned cargoes) for January loading remain unsold. Buyers in the Atlantic Basin are increasingly opting for cheaper, more reliable supplies from the Americas and the Middle East.
Dangote Refinery: The New “Anchor Customer”
Amidst the export slump, the 650,000 b/d Dangote Refinery has provided a vital lifeline for upstream producers.
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Record Absorption: The plant has imported roughly 1.7 million tonnes of Nigerian crude this month—the highest volume on record.
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Strategic Shift: By redirecting barrels that would otherwise be stuck in the unsold export backlog, the refinery is helping stabilize domestic upstream operations.
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Market Dynamics: This shift is also creating a new power dynamic. As the dominant domestic buyer, the refinery’s ability to dictate terms has unsettled regulators, contributing to the recent leadership shake-up at the NUPRC and NMDPRA.
Systemic Fragility: Production and Security
Despite the refinery’s intervention, the broader production data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) highlights persistent structural decay:
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Declining Output: National crude production slipped to 1.4 million b/d in late 2025, down from a January peak of 1.54 million b/d.
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Ongoing Risks: Aging infrastructure and “loss of containment” incidents—like the ELPS explosion—continue to undermine Nigeria’s credibility as a reliable global supplier.
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The “Maintenance” Gap: Analysts warn that while Dangote is a massive asset, its scheduled maintenance in January 2026 may temporarily reduce its ability to “mop up” surplus crude, potentially worsening the export overhang in the short term.
