Analysts: Rivers political crisis, pipeline explosion can affect oil production, investor confidence

Analysts are worried that the political crisis and explosion of crude oil pipeline in Rivers could affect Nigeria’s oil production level and investor confidence.

The political crisis and explosion of the Trans-Niger Pipeline (TNP) in Rivers led to President Bola Tinubu declaring an emergency rule in the state on Tuesday.

Tinubu also suspended Siminalayi Fubara, governor of the state; his deputy, Ngozi Odu; and all members of the Rivers assembly “for an initial period of six months,” after a prolonged faceoff between the governor and the lawmakers.

The president nominated Ibok-Ete Ibas, a retired vice-admiral, as the administrator of Rivers state.

Providing reasons for his decision, Tinubu cited “disturbing incidents of vandalisation of pipelines by some militant,” adding that Fubara did not take any action to curtail them.

Prior to the declaration of the state of emergency, it was reported that an explosion ruptured a section of the Trans-Niger Pipeline (TNP) in Bodo community, Gokana LGA of the state.

The TNP, owned by Renaissance Africa Energy, has a capacity of around 450,000 barrels per day and is a major oil artery that transports crude from onshore oilfields to the Bonny export terminal.

The explosion occurred a month after the Organisation of Petroleum Exporting Countries (OPEC) announced that it took Nigeria about a year to meet the 1.5 million daily crude oil production quota set by the group — for the 2024 period — in November 2023.

OPEC said Nigeria recorded 1.53 million barrels per day (bpd) in January 2025, however, in February, the crude oil output dropped to 1.46 million bpd.

With Rivers being a major oil-producing state, and Nigeria’s revenue and external reserves largely depending on the oil sector, experts in the industry said the situation in the state will have far-reaching economic consequences.

‘NIGERIA’S ABILITY TO MEET OIL INDUSTRY OBLIGATIONS AT RISK’

An oil expert, who pleaded anonymity, said the situation in Rivers will impact oil revenue and Nigeria’s ability to meet crude oil obligations.

“The impacts on the economy are several. Diminished revenues, leading to diminished support for the nation’s reserves, leading to diminished output to meet our obligations in terms of the deal we made on our crude swap — so it’s all negative,” he said.

“The dollar would automatically rise in value, the reserve diminishment is now going to affect petrol prices. So there’s nothing positive in this for us.”

He warned that disruptions to crude production would impact Nigeria’s ability to fulfil both domestic and international supply obligations.

“Production will diminish automatically now, and even the one you’ve allotted for your naira swaps and loans, you can’t meet obligations if everything shuts down. You can’t even give suppliers the domestic obligations,” he added.

Also speaking on the issue, Jide Pratt, chief operating officer (COO) of Aiona and country manager of TradeGrid, told TheCable that oil and politics are deeply intertwined, with any instability having direct consequences for the industry.

“For an economy that had just started to build investor confidence, especially in the energy sector, this will be a drawback as investors would take a step back and observe approach to gauge the safety and returns of current and potential investment,” he said.

According to Pratt, the pipeline explosion would further reduce oil output, as authorities prioritise assessing damage and initiating repairs.

“This creates further tension especially as the sole administrator is a former CNS. In all an atmosphere of uncertainty which is definitely not positive for our energy sector,” he said.

On his part, Muda Yusuf, an economist, said the state of emergency could divert crucial funds from development projects toward security and conflict resolution efforts.

“It is very clear that this has implications on our oil production and our foreign exchange,” Muda said.

“These are things that can affect our macroeconomic stability, so it is a major risk in the economy from the point of view of our foreign reserves and foreign exchange as well as revenue.

“If we got to the point where the the governor is impeached, the situation may get out of control, I see this as a kind of preemptive mode, an attempt to ensure that there’s a kind of ceasefire.

“The step that has been taken by the president I believe will go a long way to help forestall a further degeneration, which will greatly affect the economy.”

‘A THREAT TO INVESTORS‘

Joseph Obele,  public relations officer at the Petroleum Products Retail Outlets Owners Association of Nigeria  (PETROAN), highlighted the recurring issue of pipeline explosions in oil-producing states, calling it a major threat to Nigeria’s economy.

“This is a terrible situation. We have faced persistent threats from militants and other groups targeting our oil pipelines. In 2023 alone, Nigeria spent over N44 billion on pipeline repairs due to damages. These are taxpayers’ funds that should have been used for national development,” Obele said.

“It’s unfortunate that the explosion in Rivers is coming at a time when the country has made efforts to meet the oil production quota of 1.5 million barrels per day set by OPEC.

“The financial losses from this incident are significant, but the environmental damage is even worse. The destruction of the ecosystem is immeasurable.

“As PETROAN,  we condemn these attacks and call for a ceasefire on pipelines. This is because it affects everyone directly and indirectly. Both domestic and foreign investments will be gravely affected.”

Obele also said the president made the best decision for the safety and security of the people of Rivers, however, he believes it would negatively affect the economy of the state.