By Hosea Parah, Abuja

Nigeria is entering 2026 with renewed confidence in its energy sector as improved domestic refining capacity reshapes the country’s fuel supply landscape, according to the Nigeria Energy Sector Outlook for the first quarter of 2026.

The report highlights a major shift driven by the operational stability of the Dangote Refinery, which has significantly reduced Nigeria’s dependence on imported petroleum products. With earlier workforce and operational challenges resolved, the refinery is now supplying between 60 and 75 per cent of the nation’s fuel needs locally—a sharp contrast to previous years when imports dominated the market.

Analysts note that this development marks a transition from reactive crisis management to a more disciplined and forward-looking execution model within the sector. “The stability in local supply has redefined our approach,” the report states, adding that fuel imports have shifted from being a necessity to a strategic option.

As a result, fuel pricing is expected to become more predictable. Under a partially subsidized framework, Premium Motor Spirit (PMS) prices are projected to range between ₦800 and ₦1,100 per litre, helping to cushion consumers against extreme price volatility.

Beyond refining, the outlook emphasizes the importance of maintaining reliable deepwater crude production while leveraging recent asset divestments to boost onshore output. Progress on the long-awaited Ogoni reconciliation process is identified as critical to unlocking additional production capacity.

The report also points to the anticipated commissioning of the OB3 gas pipeline as a major milestone for the power sector. Once completed, the pipeline is expected to improve gas supply to power plants and support increased electricity generation nationwide.

However, the government is urged to adopt a transparent and consistent approach to fuel subsidy management and to strengthen security around critical energy infrastructure to sustain current gains.

Economically, the improved fuel supply is expected to ease pressure on Nigeria’s foreign exchange reserves by reducing import costs. This, in turn, could support a gradual slowdown in inflation, which is projected to stabilize between 21 and 24 per cent.

Looking ahead to April 2026, the report identifies key benchmarks for success, including sustained crude oil production of between 1.6 and 1.72 million barrels per day, Dangote Refinery utilization rates of 65 to 85 per cent, and measurable progress on strategic projects such as the Ogoni implementation and the OB3 pipeline.

While potential risks remain—particularly delays in gas infrastructure projects and uncertainty around subsidy policies—the overall outlook for Nigeria’s energy sector is positive.

“Nigeria now has a clear runway,” the report concludes. “With sustained refining operations and timely execution of critical projects, the sector is moving decisively from fragility toward resilience.”