Four years after the Petroleum Industry Act (PIA) was enacted to transform Nigeria’s oil and gas sector, many of its anticipated benefits remain elusive. While the law was widely hailed as a landmark reform capable of unlocking fresh investments and boosting production, regulatory bottlenecks, policy inconsistencies, and delays in implementation continue to frustrate investors and operators, undermining the sector’s growth potential.
Signed into law in August 2021 after nearly two decades of legislative efforts, the PIA promised to overhaul governance, fiscal terms, and host community relations in Africa’s largest oil producer. At the time, stakeholders described the Act as a “game-changer” that would usher in billions of dollars in new investments, enhance production capacity, and resolve lingering tensions in oil-bearing communities.
However, as the industry marks the PIA’s fourth anniversary, many of those promises have yet to materialise. Uncertainties around regulatory roles, weak coordination among newly created agencies, and rising compliance costs have dampened the law’s intended impact.
Etulan Adu, an oil and gas analyst, acknowledged that the PIA had provided clearer fiscal policy direction, especially in upstream investments and the development of offshore blocks by international oil companies (IOCs).
“The PIA with government support creates an avenue for indigenous oil company participation and local content development,” he said. “With it, the ease of doing business and permit approvals, bidding for oil blocks have been streamlined. It also led to the unbundling of NNPC, which is indeed a step forward in ensuring business performance as a corporate entity.”
Adu added that the law has helped position Nigeria as a serious and globally competitive investment destination. “It has helped to show that Nigeria is serious about being globally competitive and an attractive investment destination. The fight with oil theft is still eminent,” he noted.
Despite these gains, Adu stressed the urgent need for more effective implementation to ensure the PIA benefits the Nigerian people. He pointed out that progress in the downstream sector has been limited compared to the upstream.
“The PIA made provision for this, but the implementation, impact and improvement haven’t been significant compared to the upstream sector. The removal of subsidy is a plus for investors but government involvement in market pricing and the opaque nature of agency administration and regulations is hindering progress,” he said.
Kelvin Emmanuel, an energy expert, expressed similar concerns about enforcement and compliance. Speaking to BusinessDay, he said the provisions of the PIA have not been fully enforced by regulators, nor has there been full compliance by operators. He cited slow regulatory oversight of the Hydrocarbon Community Development Trust (HCDT) as an example of the law’s incomplete implementation.
“While you can say that the Petroleum Industry Act has separated the state-owned enterprise from its regulators and has modernised the fiscal terms that govern the commercial framework for contracts in the upstream sector, there has not been full enforcement of regulators or compliance from operators on the provisions of the PIA,” Emmanuel said.
He highlighted the slow rollout of domestic crude supply obligations under section 109 of the PIA, noting that many operators cite stabilisation clauses related to pre-export facilities to excuse non-compliance.
Emmanuel called for clarifications and amendments to the Act, especially to differentiate domestic crude intervention stocks from Nigeria’s OPEC quota. “There is need to separate the domestic crude intervention (DCI) stock from OPEC Quota, and classify DCI into a strategic petroleum reserve, as a tool to guarantee Nigeria’s energy security,” he added.
He also suggested the President, who doubles as the Minister of Petroleum, should consider appointing new regulators with clear mandates to drive the PIA’s implementation and advance Nigeria’s energy security.
One of the significant reforms under the PIA was the restructuring of Nigeria’s petroleum regulatory framework. The Act created two distinct agencies: the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), each tasked with overseeing different segments of the industry.
Despite this restructuring, overlapping mandates between the two bodies have fueled confusion and uncertainty. Lateef Bamidele of the Energy Practice Team noted that while Nigeria has attracted investments in brownfield optimization, it lags behind emerging African energy markets like Namibia, Angola, and Mozambique in greenfield projects.
“Namibia’s Venus and Graff discoveries have drawn significant exploration budgets from TotalEnergies, Shell, and QatarEnergy, while Angola’s stable regulations, aggressive fiscal incentives, and swift approvals have spurred a deepwater revival evidenced by over $60 billion in energy sector investments,” Bamidele said.
“Mozambique’s LNG megaprojects continue to advance despite security challenges, buoyed by proximity to Asian markets.”
By contrast, Nigeria has been held back by approval bottlenecks, perceived policy uncertainty, and lingering operational risks.
“The country continues to trail these new African destinations in attracting new exploration and development funds, partly due to slower regulatory processes and shifting investor focus towards emerging markets as well as concerns over contract sanctity,” Bamidele explained.
He acknowledged that while the PIA had improved regulatory clarity and facilitated the entrance of capable local operators through IOC divestments, competitiveness gains had been blunted by persistent policy and regulatory frictions.
“The NUPRC–NMDPRA jurisdictional overlap creates uncertainty for investors, compounded by shifting fiscal parameters such as the recent Nigerian Tax Act, 2025, which limits tax deductibility for decommissioning funds not domiciled locally.
These shifts resemble ‘moving the goalposts’ and erode investor confidence,” Bamidele said.
Another major challenge has been the protracted delay by both regulatory agencies in issuing subsidiary regulations required to operationalize the PIA.
Though some regulations have been approved, several key ones remain in limbo. “This slow implementation has created investor uncertainty and stalled the momentum the Act was meant to generate,” Bamidele added.
He also warned that an increasing tendency to commercialize regulation—where most regulatory activities attract new charges—is adding to hidden costs. This, he said, erodes Nigeria’s competitiveness and drives investment toward African markets perceived as more predictable, cost-efficient, and investor-friendly.
A striking example of these challenges was the recent ExxonMobil–Seplat acquisition, initially stalled by a tussle between NNPC and NUPRC. The drawn-out process highlighted the urgent need for swift, coordinated decision-making at the highest levels.
“Indeed, the PIA has established a baseline framework for industry growth, but real capacity expansion demands more than legislation or asset transfers; it requires converting investments into new barrels, infrastructure, and midstream capacity.
“These outcomes were meant to be driven by the dual regulatory regime, but instead, jurisdictional overlaps between the regulators have fueled friction over licensing, operational mandates, and revenue collection—undermining investor confidence, delaying project timelines, and creating an unpredictable operating environment for industry players,” Bamidele stressed.