Nigeria’s domestic gas market recorded a significant increase in sales, rising by about 30 per cent between January 2022 and January 2025, driven by reforms under the Petroleum Industry Act 2021 and recent executive orders by President Bola Tinubu, according to a legal analysis by Tope Adebayo LP.

The Lagos-based full-service law firm said in a statement made available to our correspondent that the reforms have improved regulatory clarity, fiscal attractiveness and investor confidence across the gas value chain, even as infrastructure gaps and implementation challenges continue to slow the pace of growth.

It stated that Nigeria, which holds more than 206 trillion cubic feet of proven gas reserves, has long struggled to convert its resource base into domestic energy supply due to underinvestment, weak infrastructure and gas flaring.

According to data cited in the report, domestic gas sales rose from 49.3bscf in January 2022 to 64.2bscf in January 2025, reflecting the gains attributed to ongoing reforms under the PIA.

The report noted that the legislation marked a turning point for the sector.

“The PIA represents the most comprehensive reform of Nigeria’s petroleum sector in decades and has established a stronger foundation for domestic gas development through regulatory clarity, pricing liberalisation mechanisms, infrastructure support and enhanced investment incentives,” the firm stated in a report titled ‘From Policy to Practice: Legal and Regulatory Drivers of Nigeria’s Domestic Gas Market Under the PIA and Recent Executive Orders’.

It explained that structural reforms under the Act, including the creation of separate regulatory authorities for upstream and midstream/downstream operations, have helped to improve oversight and reduce regulatory bottlenecks.

The analysis also highlighted the Domestic Gas Delivery Obligation framework as a key intervention aimed at boosting supply to strategic sectors such as power generation and industry. The framework includes enforceable penalties for non-compliance.

It further noted improvements in gas utilisation and supply performance, alongside modest reductions in gas flaring and the expansion of the Nigerian Gas Flare Commercialisation Programme, which it said has seen multiple flare sites auctioned for monetisation projects.

Beyond production measures, the PIA, it stated, introduced open-access provisions for infrastructure, partial liberalisation of gas pricing and the establishment of the Midstream and Downstream Gas Infrastructure Fund to support investments in processing, transportation and distribution.

The law firm maintained that recent executive orders and presidential directives have also strengthened the investment climate through tax incentives, faster contracting timelines and more flexible local content implementation.

“These interventions signal a deliberate effort by the government to improve project economics and enhance Nigeria’s competitiveness as a destination for gas investments,” Tope Adebayo LP noted.

However, the firm warned that policy gains alone are insufficient to deliver the market’s full potential.

“Large-scale outcomes remain constrained by persistent infrastructure gaps, payment risks within the power sector, legacy debts, and implementation inefficiencies. The transition from policy to practice is clearly underway, but it remains incomplete,” it stated.

According to the analysis, achieving a fully functional and scalable domestic gas market will require sustained investment in pipelines, processing facilities, transportation networks and distribution systems, alongside stronger institutional coordination and consistent regulatory execution.

The report stated that the foundations had been laid, but long-term success would depend on effective implementation and continued market reforms. It added that, to unlock the full promise of the Decade of Gas initiative, Nigeria must bridge the gap between legal design and operational reality.

Fixed-income analysts are strongly advising institutional investors and fund managers to realign their portfolios towards short-dated sovereign instruments, following an aggressive liquidity mop-up by the CBN that has pushed Open Market Operations yields to highly competitive levels.

The calls for tactical reallocation come on the heels of the latest primary market auction, where the apex bank offered N200.00bn across three distinct tenors. The exercise triggered an unprecedented wave of liquidity deployment, with total investor subscriptions shattering expectations to hit over N2.5tn. Market participants say the scale of demand reflects not only excess liquidity in the financial system but also heightened caution among institutional investors navigating an environment of sticky inflation, exchange rate volatility, and uneven fiscal buffers across key sectors of the economy.

CBN’s liquidity mop-up

Market sentiment is rapidly shifting as fixed-income desks react to the lucrative clearing rates offered by the monetary authority.

“The CBN is sending a very clear message to the market: liquidity control remains the absolute priority, and they are willing to pay a premium to achieve it,” stated an investment research analyst at Meristem Securities.

“With stop rates clearing at 21.80 per cent for the 11-day paper and 20.37 per cent for the 102-day instrument, analysts urge fixed-income investors to ride the OMO yield wave while these elevated windows remain open,” it added.

The auction data reveals an intense concentration of demand at the longer end of the offered curve, where the 102-day maturity drew an astronomical N1.73tn in bids. The CBN eventually allotted N1.72tn to this segment and N220.00bn to the ultra-short 11-day paper, while completely rejecting all bids for the intermediate 39-day paper. Analysts interpret this skewed demand pattern as evidence of a market structure increasingly anchored on yield optimisation rather than tenor diversification, as investors crowd into instruments perceived as offering the best risk-adjusted return in a tightening liquidity cycle.

Beyond the headline figures, dealers note that the heavy subscription levels also underscore the depth of idle liquidity in the banking system prior to the CBN’s intervention. With interbank rates tightening and liquidity buffers being actively sterilised, fund managers are recalibrating strategies to align with a policy environment that prioritises monetary tightening over growth support in the short term.

Yield curve pressures

The aggressive pricing of OMO bills has reverberated across adjacent fixed-income segments, triggering mixed reactions in the secondary markets. This shifting pricing structure became evident over the week as primary market OMO stop rates cleared at 21.80 per cent for the 11-day paper and 20.37 per cent for the 102-day paper, directly influencing broader trading desks.

While the secondary Nigerian Treasury Bills market maintained relative stability with average yields edging down by a single basis point to 17.51 per cent, the sovereign bond market succumbed to notable selling pressure, pushing average long-term FGN bond yields up by eight basis points to settle at 16.32 per cent. Traders say this divergence highlights a fragmented response function across instruments, with shorter-tenor assets benefiting from liquidity chasing yield, while longer-dated bonds experience repricing pressure due to duration sensitivity.

“We are witnessing a profound structural rotation out of long-term debt into short-term high-yield papers. The sharp volatility in the March 2027 bond, which saw its yield spike by 121 basis points in a matter of days, underscores a tactical retreat by asset managers who are trying to avoid duration risk while inflation risks linger,” noted a secondary desk dealer at a major tier-1 investment bank.

Market analysts add that the steepening of yield pressures at the longer end is also being shaped by inflation expectations that remain insufficiently anchored, despite recent monetary tightening. This has created a scenario where investors increasingly demand a premium for holding duration, further accelerating the shift into short-term instruments.

Short-term safe haven

The aggressive positioning by local investors aligns with broader macroeconomic realities. Locally, though Nigeria’s economy showed positive structural resilience with a 3.89 per cent year-on-year GDP expansion in Q1, lingering inflationary pressures from late Q1 continue to keep investment committees cautious of locking up capital for extended durations. The GDP figure, while encouraging, masks significant sectoral disparities that continue to influence capital allocation decisions across institutional portfolios.

“When you look at the macroeconomic backdrop, short-duration strategy is simply the most logical play right now,” explained an asset manager overseeing a leading pension fund. “The sheer volume of funds, N1.73tn, seeking a home in a 102-day OMO paper, proves that institutional mandates are locking in these guaranteed, risk-free returns. Why absorb the volatility of a five-year or 10-year bond at 16.3 per cent when you can capture over 20 per cent in less than four months?”

Portfolio managers further note that regulatory frameworks governing pension and insurance funds are also reinforcing this shift, as risk-weighted capital considerations increasingly favour short-dated, highly liquid instruments during periods of monetary tightening. This has created a feedback loop where policy, regulation, and market behaviour reinforce the same directional bias toward short-term sovereign exposure.

Real sector realities

The cautious duration stance is further validated by a deep dive into the underlying sectors of the economy. According to the latest Meristem Macroeconomic Update and GDP Report for Q1 2026, the real sector presents a highly fragmented outlook, driving investors to favour liquid financial assets over long-term structural bets.

The oil sector is expected to maintain a steady expansion, providing a reliable cushion for the broader economy. This growth is heavily tethered to continuous government security enhancements in oil-producing regions, which aim to curb theft and pipeline vandalism through initiatives such as Operation Delta Sentinel. However, analysts caution that the sector remains vulnerable to execution risks and external price volatility, which could disrupt projected output gains.

“The oil sector’s structural recovery is key, but it remains heavily dependent on security execution,” noted an energy desk lead at an indigenous brokerage firm. “Furthermore, production volumes are set to gain from faster, shorter approval timelines to restart inactive oil wells, a much more rapid alternative to drilling new ones. On the infrastructure front, the commencement of operations at the FSO Cawthorne vessel and terminal is providing a reliable evacuation route for critical assets like OML 18. Similarly, natural gas supply is projected to strengthen heading into the second half of 2026, driven by the anticipated completion of the River Niger crossing segment of the OB3 gas pipeline.”

Agricultural pressures

In contrast, the agricultural sector faces imminent near-term headwinds. Output is expected to moderate in Q2 2026 due to the seasonal planting lull. Compounding this, elevated fuel costs are actively driving up transportation and farm input costs, tightening farmer margins and feeding directly into the visible 16.06 per cent food inflation recorded for April 2026.

The inflationary pressure in food markets continues to weigh heavily on household consumption and rural income stability, further complicating policy transmission dynamics.

“The structural bottlenecks in our agro-allied sector are forcing capital allocation to stay nimble,” remarked an investment committee member during a weekly strategy review. “While medium-term prospects remain moderate, buoyed by future harvests and carry-forward benefits from government dry-season schemes like the National Agricultural Growth Scheme and Agribusiness Project, long-term productivity remains structurally constrained. The sector continues to grapple with limited financing following the suspension of the Anchor Borrower’s Programme, persistent regional insecurity, surging fertiliser costs, and weak post-harvest logistics.” These constraints continue to discourage long-horizon private investment into agriculture despite its strategic importance to food security.

ICT energy headwinds

The Information and Communications Technology sector remains a bright spot, with growth projected to remain strong. This momentum is propelled by robust data consumption, broadening broadband penetration, and sustained corporate investments in network expansion, including the continued rollout of 5G infrastructure across major Nigerian cities.

The sector continues to attract foreign and domestic capital inflows, even amid broader macroeconomic tightening.

“Even our highest-growth vectors are feeling the macro pinch. The sector is high-performing, but it is not immune to macroeconomic pressures; rising energy prices are expected to drive up operational overheads and squeeze corporate margins,” a Meristem researcher noted. Industry operators also point to foreign exchange constraints and energy volatility as key risks that could moderate profit expansion in the medium term.

As macro liquidity remains heavily managed by the CBN to counter these mixed structural signals, investment advisors anticipate that secondary market bond yields will experience sustained upward pressure for as long as primary OMO rates remain structurally elevated. This environment is expected to persist until there is a meaningful easing in inflation trends or a shift in the central bank’s liquidity management stance.

For a closer look at the market environment leading up to these economic adjustments, watch this analysis of the CBN’s Policy Choices and Liquidity Interventions. This financial broadcast reviews the apex bank’s tools for controlling excess liquidity and managing local banking assets.

Nigeria’s ambition to raise crude oil production has received a boost from the growing contribution of newly introduced crude grade streams, Utapate and Cawthorne,

The crude grades, introduced in 2024 and early 2026, represent the latest additions to the country’s basket of crude oil grades aimed at expanding export streams and strengthening oil revenues.

Based on the Nigerian Upstream Petroleum Regulatory Commission’s monthly crude and condensate production data analysed by our correspondent on Friday, the Utapate crude grade produced a total of 8.75 million barrels between January and May 2026, while the newly introduced Cawthorne blend contributed 3.41 million barrels during the same period, bringing the combined output from both crude grades to approximately 12.16 million barrels.

The data also showed that Utapate has yet to achieve its projected output target announced by the government, even as production remained more than 20,000 barrels per day below the 80,000 bpd target set by operators.

The figures showed that Utapate recorded an average daily production of 55,190 barrels in January. Based on the 31-day month, this translated to a total monthly output of 1.71 million barrels.

Output increased to 57,970 barrels per day in February, yielding about 1.62 million barrels, before rising marginally to 58,020 barrels daily in March, equivalent to roughly 1.80 million barrels.

In April, the field attained its highest daily production level of 59,290 barrels, producing an estimated 1.78 million barrels during the month. Production moderated slightly to 59,170 barrels per day in May but still generated approximately 1.83 million barrels due to the longer calendar month.

However, despite the upward trend, the data indicated that Utapate remained significantly below the 80,000 barrels-per-day target. The field fell short by 24,810 barrels daily in January, 22,030 barrels in February, and 21,980 barrels in March. The production gap narrowed to 20,710 barrels per day in April before widening marginally to 20,830 barrels in May.

The development suggests that although operators have made progress in scaling up production, the ambitious target announced earlier by the Nigerian National Petroleum Company Limited has yet to be realised.

The Utapate field, which commenced production in May 2024, had been projected to achieve 80,000 barrels per day by the end of 2025.

Speaking at the launch of the Utapate crude blend in July 2024, the Managing Director of NNPC E&P Limited, Nicholas Foucart, expressed confidence that ongoing development projects would substantially increase production capacity.

“We have several ongoing projects to increase our production from the current 40,000 bopd to 50,000 bopd by January 2025, and 60,000 bopd to 65,000 bopd by June 2025. Essentially, we are targeting opportunities to increase production to 80,000 bopd by the end of 2025,” Foucart said.

The Utapate crude blend was introduced into the international market by NNPCL and its partner, Sterling Oil Exploration and Energy Production Company Limited, following the lifting of the maiden cargo of 950,000 barrels destined for Spain.

Produced from Oil Mining Lease 13 in Akwa Ibom State, the crude grade possesses characteristics that have attracted international interest. It has a sulphur content of 0.0655 per cent and a relatively low carbon footprint resulting from flare gas elimination.

Foucart had described the introduction of the blend as “a significant milestone for Nigeria’s crude oil export to the global energy market.”

According to him, OML 13, which is fully operated by NNPC Exploration and Production Limited and Natural Oilfield Services Limited, a subsidiary of SEEPCO Limited, holds reserves estimated at 330 million barrels of crude oil, 45 million barrels of condensate and 3.5 trillion cubic feet of gas.

He added that the Utapate terminal was designed to meet global environmental standards. “The Utapate crude oil terminal is sustainable, affordable and fully compliant with the rigorous environmental regulations and sustainability principles, especially those aimed at reducing carbon emissions and other ecological effects,” he stated.

Meanwhile, another emerging crude stream, Cawthorne, contributed 3.41 million barrels to Nigeria’s production between January and May, according to the NUPRC data.

The figures showed that Cawthorne’s average daily production rose sharply from 12,340 barrels in January to 16,450 barrels in February and 23,970 barrels in March. The field sustained the momentum in April, reaching 30,970 barrels per day before easing slightly to 28,940 barrels daily in May.

The monthly production volumes translated to 382,540 barrels in January, 460,600 barrels in February, 743,070 barrels in March, 929,100 barrels in April and 897,140 barrels in May.

NNPC Ltd had recently announced the commencement of exports from the Cawthorne blend, describing the development as part of efforts to increase Nigeria’s crude oil production and strengthen the country’s position in the global energy market.

In a statement, the Chief Corporate Communications Officer of NNPC Ltd, Andy Odeh, said the first cargo of the new grade was lifted aboard the MT Eburones vessel for shipment to the Netherlands.

“The Nigerian National Petroleum Company Limited has commenced export of its new crude grade, Cawthorne, marking a significant milestone in the company’s drive to increase Nigeria’s crude oil production and expand its portfolio of globally competitive export streams,” Odeh said.

He added, “Cawthorne blend crude, the latest addition to Nigeria’s basket of crude grades, has an API gravity of 36.4, placing it firmly within the light, sweet category, comparable to Bonny Light, and highly valued in the global market for its superior petrol and diesel yields.”

According to him, the maiden cargo, estimated at 950,000 barrels, was exported through the Cawthorne Floating Storage and Offloading vessel located offshore Bonny, Rivers State.

“The cargo was exported via the Cawthorne Floating Storage and Offloading vessel, which is strategically located offshore Bonny. The facility enhances crude evacuation from OML 18 and strengthens Nigeria’s export reliability, operational efficiency and overall energy security,” Odeh stated.

The emergence of both Utapate and Cawthorne underscores Nigeria’s determination to diversify its crude export portfolio and maximise oil earnings. However, the latest NUPRC figures also highlight the operational challenges facing producers as they strive to convert ambitious output targets into actual barrels.

Combined, Utapate and Cawthorne contributed an estimated 12.16 million barrels of crude oil between January and May, providing additional support to Nigeria’s broader efforts to sustain production growth and improve foreign exchange earnings from the oil sector.

On Thursday, the NUPRC reported that Nigeria’s crude oil production rose above its Organisation of the Petroleum Exporting Countries quota in May 2026, with the country recording its highest crude output in 15 months amid improved operational stability and the absence of major disruptions across key oil facilities.

Data released showed that Nigeria produced an average of 1,530,354 barrels of crude oil per day in May, representing 102 per cent of the country’s 1.5 million barrels-per-day quota approved by OPEC.

When condensate production of 170,446 barrels per day is added, Nigeria’s total oil output climbed to 1,700,800 barrels per day, further strengthening the country’s position as Africa’s largest oil producer and boosting revenue.

The World Bank said it could mobilise as much as $100bn in financial support over the next 15 months to help developing economies cushion the impact of escalating tensions in the Middle East.

The potential increase in funding comes as the lender warned the conflict could drag global growth to its weakest level since the COVID-19 pandemic, as surging energy prices, persistent inflation and tighter financial conditions weigh on economic activity.

In its latest Global Economic Prospects report obtained on Friday, the bank projected global growth would slow to 2.5 per cent in 2026, down from 2.9 per cent in 2025, with around two-thirds of economies seeing downward revisions since its January outlook.

Growth is expected to edge up to 2.8 per cent in 2027 but remain below the average recorded during the 2010s, the report said.

The World Bank said it was immediately making between $50bn and $60bn available through existing financing instruments, including $25bn in pre-arranged funding. The resources are expected to support social safety nets, strengthen government finances and provide liquidity for businesses and farms affected by the crisis.

“To date, over 30 countries are actively working with the World Bank Group to enhance readiness and enable a rapid response to the crisis under this response plan. If the conflict and its economic fallout persist, the World Bank Group can scale up its support to $80–100bn over 15 months,” the lender stated.

According to the report, the closure of the Strait of Hormuz has severely disrupted energy markets, with Brent crude oil prices forecast to average $94 a barrel in 2026, about 36 per cent higher than in 2025, assuming the worst supply disruptions ease by July.

The bank also warned that higher fertiliser prices would likely feed into food inflation, lifting global inflation to an estimated four per cent this year, up from 3.3 per cent in 2025.

“Developing countries have faced a series of challenges over the last decade,” World Bank Group President Ajay Banga said.

“The impact differs by country, but the basic test is the same: protect people and preserve stability today, without giving up on growth and jobs tomorrow. In response to the current shock, we are providing liquidity where it is needed now, and we are ready with additional financing, guarantees and private-sector solutions if pressures deepen,” he added.

The report noted that downside risks remain significant. It warned that if energy supply disruptions worsen and trigger financial market stress, global growth could slump further to 1.3 per cent in 2026, while inflation could climb to 4.4 per cent.

Developing economies are expected to see growth slow to 3.6 per cent this year from 4.4 per cent in 2025 before recovering to 4.2 per cent in 2027. Gulf economies directly affected by the conflict are projected to experience the sharpest slowdown, with growth falling from 3.9 per cent in 2025 to nearly zero in 2026 before rebounding to around 5 per cent in 2027 and 2028 as trade resumes and reconstruction efforts gather pace.

Sub-Saharan Africa is also expected to feel the impact of the crisis, particularly through higher inflation and rising food prices linked to fertiliser shortages and price increases.

The World Bank’s Deputy Chief Economist and Director of the Prospects Group, Ayhan Kose, said the crisis should also serve as an opportunity for governments to strengthen economic resilience.

“The conflict has taken a toll on global activity, but every crisis also brings an opportunity. This moment should be used to strengthen policy frameworks, invest in infrastructure, accelerate business-enabling reforms and mobilise private capital to support job creation at scale,” he said.

The report also highlighted growing fiscal pressures across developing economies, noting that aggregate government debt has risen from below 40 per cent of gross domestic product in 2010 to more than 70 per cent.

It warned that rising debt levels are making it increasingly difficult for countries to respond to shocks and invest in long-term priorities such as infrastructure, healthcare and education.

The Federal Government may begin paying salaries, pensions and social welfare benefits through the eNaira under a new Central Bank of Nigeria roadmap aimed at transforming the country’s digital currency into a major payment channel.

The proposal is contained in the Nigeria Payments System Vision 2028, released by the CBN, which outlines plans to expand the use of the eNaira and move it from a pilot project to a core payment rail for government and private-sector transactions.

The eNaira, launched in October 2021 as Africa’s first central bank digital currency, was introduced to deepen financial inclusion, reduce the cost of transactions and remittances, and promote a cashless economy. However, adoption has remained relatively low despite years of regulatory support.

In the new document, the apex bank said it would revisit the existing CBDC framework to better align it with market realities and operational needs.

The CBN stated, “Transition CBDC from pilot to core payment rail through defined use cases.” It identified government-to-person payments, payroll processing, offline payments and micro-enterprise enablement as key domestic applications for the digital currency.

The proposal suggests that government salaries, pensions, conditional cash transfers and other public-sector disbursements could in future be channelled through the eNaira platform as part of efforts to accelerate adoption and improve payment efficiency.

The document further highlighted the programmable-money features of the digital currency, noting that it could support advanced functionalities such as time limits on spending, purpose-specific payments, payment splitting and sub-wallet creation.

According to the CBN, “The ‘programmable money’ feature of digital currency could have additional features such as time-limits, purpose-specific usage, splitting payments, sub-wallets, etc.”

The bank added that the digital currency could also strengthen financial market infrastructure by supporting settlement systems, banks and tokenised financial assets, including bonds and securities, while making transactions faster and cheaper.

The initiative forms part of the broader Payments System Vision 2028, which seeks to modernise Nigeria’s payment ecosystem through greater adoption of digital financial services, stronger payment infrastructure and the deployment of emerging technologies.

CBN Governor Olayemi Cardoso, in the foreword to the document, said the payments system vision was designed to consolidate Nigeria’s position as a leading digital payments market while improving efficiency, resilience and inclusiveness.

He said, “PSV2028 sets clear strategic priorities: modernising payments infrastructure, strengthening regulatory and supervisory frameworks, accelerating the adoption of digital financial services, and fostering deeper collaboration across stakeholders.”

The document showed that the apex bank intends to deepen and scale existing initiatives, including contactless payments, open banking and the Central Bank Digital Currency.

The CBN’s Deputy Governor for Economic Policy, Dr Muhammad Abdullahi, said the vision would support the broader application of digital currencies and other innovative payment technologies within a robust regulatory framework.

He stated, “The PSV2028 seeks to deepen and scale these initiatives, while also assessing and adopting new technologies capable of expanding the reach, functionality and quality of financial services.”

The document acknowledged that despite recording millions of wallet registrations and transactions worth about N22bn, the eNaira had yet to achieve widespread use in everyday economic activities.

It noted that the digital currency suffers from limited merchant adoption, weak integration with banking and fintech applications, and the absence of live cross-border CBDC payment corridors.

To address these challenges, the CBN proposed repositioning the eNaira for government payments, remittances and trade settlements while opening application programming interfaces for fintech integration.

The document stated that the apex bank would also pursue bilateral CBDC corridor pilots with major trade and remittance partners to support cross-border transactions.

The CBN said, “Reposition eNaira for G2P, remittances, trade settlement; open APIs for Fintech integration; launch bilateral CBDC corridor pilots with priority trade/remittance partners.”

The bank also disclosed that Nigeria had already recorded millions of eNaira wallets and transactions valued at N22bn, although it admitted that usage remained low due to limited real-economy applications and weak merchant value propositions.