Energy Practice Team
Introduction
On 16 August 2025, the Petroleum Industry Act, 2021 (“PIA”) turns four, enacted after nearly two decades in development, the PIA marked a pivotal moment in Nigeria’s energy landscape, aiming to overhaul a sector long constrained by outdated legislation, weak regulatory structures, and underwhelming investment. It aimed to drive economic growth, enhance governance, foster competition, and align Nigeria’s petroleum industry with global standards. The PIA promised improved fiscal terms, stronger oversight, and tangible benefits for host communities. With Nigeria securing only 4% of Africa’s $70 billion oil and gas investments between 2015 and 2019[1] despite having one of the continent’s largest reserves and production capacity, the urgency for reform was evident. Yet, its passage coincided with a global shift toward cleaner energy, raising questions about its timeliness and relevance. Four years on, this article evaluates the PIA’s impact and explores its implications for Nigeria’s energy future in a rapidly evolving global market.
The Promise of the PIA
The PIA stands as the most comprehensive legislative reform in Nigeria’s petroleum history, and it was designed to address decades of inefficiencies, investor uncertainty, and fragmented governance, while setting a new course for sustainable growth, community inclusion, and global competitiveness.
A major structural change was governance reform, replacing the old, centralised Department of Petroleum Resources with two independent specialised agencies: the Nigerian Upstream Petroleum Regulatory Commission (“NUPRC”) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (“NMDPRA”). This dual regulatory regime aimed to bring clarity to oversight functions and give midstream and downstream segments overdue attention.
Beyond governance, the PIA also promised an easier business environment by streamlining approval processes for licensing, acquisitions and divestments and project financing, the Act promised to reduce bureaucratic delays that have historically hindered project execution. This particularly was important in a global market where capital flows to jurisdictions that offer certainty, speed, and a fair return on investment.
The PIA also sought to address one of the sector’s most contentious issues, the relationship between oil and gas operators and their host communities. Through the Host Communities Development Trust, funded by a mandatory contribution of 3% of annual operating expenditure (OPEX) from operators, the Act institutionalises a framework for direct community benefit in form of financing of infrastructure projects, social services, and local economic initiatives. The intent was to foster goodwill, reduce vandalism and other incidence of community unrest that may affect operations.
Lastly, the PIA promised a stable and competitive regulatory framework to underpin licensing rounds and unlock untapped hydrocarbon reserves, signalling Nigeria’s readiness to compete for capital on the global stage.
Four Years On, how has PIA fared in delivering on these promises?
In the last four years, Africa’s oil and gas sector has attracted substantial investments across upstream, midstream, and LNG projects. Capital has flowed into Namibia’s frontier exploration, Angola’s deepwater developments, Mozambique’s LNG expansions, and Nigeria’s brownfield optimisation projects. Namibia’s Venus and Graff discoveries[1] have drawn significant exploration budgets from TotalEnergies, Shell, and QatarEnergy[2], while Angola’s stable regulations, aggressive fiscal incentives and swift approvals have spurred a deepwater revival[3] evidenced by over $60 billion in energy sector investments. Mozambique’s LNG megaprojects continue to advance despite security challenges, buoyed by proximity to Asian markets.[4]
Nigeria, though strong in brownfield optimisation but lags in greenfield projects due to 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.
The PIA has improved clarity in some respects, and recent acquisitions from IOC divestments have brought capable local operators to the fore. Yet, competitiveness gains are 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.[5] These shifts resemble “moving the goalposts” and erode investor confidence.
Another major test point has been the prolonged delay by both regulators in issuing the subsidiary regulations required to operationalise the PIA. While a good number of regulations have been issued, there are still several regulations awaiting approval. This slow implementation has created investor uncertainty and stalled the momentum the Act was meant to generate. In addition, there is an increasing tendency to commercialise regulation, where most regulatory activities attract new charges, adds to hidden industry costs, eroding Nigeria’s competitiveness and driving investment toward African markets seen as more predictable, cost-efficient, and investor friendly.
Perhaps one of the clearest examples of Nigeria’s ongoing investment credibility challenges is the recently approved ExxonMobil–Seplat acquisition, initially stalled by the NNPC–NUPRC tussle, and underscores the need for swift, coordinated decision-making at the top. Without this, Nigeria risks falling behind neighbours who offer stable, predictable investment climates and faster project maturation timelines.
The Journey Ahead
In terms of security of investment and supply efficiency, the PIA assigns responsibilities not only to the regulators but also to host community structures. The NMDPRA is mandated to safeguard domestic supply of petroleum products and natural gas, while Host Communities Development Trust are expected to support local initiatives that enhance operational security. Yet in practice, operators still bear excessive security costs, absorbing risks the state should mitigate. This anniversary is an opportunity to realign with the legislative intent, ensuring government-led security that allows operators to focus on productivity.
Also, the regulators must prioritise issuing all outstanding regulations to provide the industry with a clear and stable view of the regulatory landscape, essential for driving investment decisions, supporting the bid process, and enabling the development of critical infrastructure projects in the midstream and downstream sectors. In addition, the Commission should accelerate the ongoing bid rounds for exploration acreage, in full alignment with the provisions of the PIA. These priorities will promote competitiveness and ensure optimal utilisation of the nation’s petroleum resources in accordance with PIA’s objectives.
Furthermore, while the PIA has spurred certain midstream and downstream investments, particularly in gas projects and refineries backed by government incentives, industry coordination and competitiveness remain lacking. Nigeria is yet to achieve an integrated market that reduces reliance on fuel imports, which continue to drain foreign reserves. Refineries still face domestic supply shortages, and the Domestic Supply Obligation framework has not been fully realised due to regulatory-practical gaps and weak industry cooperation. Delivering on this promise demands full alignment and collective action across all stakeholders.
Finally, while many Host Community Development Trust Funds have been established, operators in the deep offshore still await regulatory guidance on identifying and engaging their host communities. This delay undermines the PIA intent for high-impact projects that tangibly improve the quality of life, foster goodwill, and reduce tensions in producing areas. Delivering on this promise is essential to the long-term stability of the sector.
Conclusion
Four years on, the PIA has removed structural bottlenecks and improved the regulatory environment but the gap between promise and performance is still wide. Competing African markets are demonstrating that stable rules, swift approvals, and cost efficiency are the currency of global investment. Nigeria has the reserves, relative infrastructure, and market size to lead Africa’s oil and gas renaissance, but it must seize that position by proactive action and coordinated efforts across industry stakeholders. The PIA’s fourth anniversary should not just be a milestone; it must be a turning point. Otherwise, history may remember it more for the opportunities lost than for the transformation promised.
[1] https://www.vanguardngr.com/2021/01/pib-how-nigeria-attracted-only-4-of-75bn-africas-oil-gas-investment-in-4-years/? > accessed August 14, 2025
[1] https://miningandenergy.com.na/namibia-oil-discoveries-have-11-billion-barrels-potential/> accessed August 14, 2025
[2] https://energyinafrica.com/news/totalenergies-investment-decision-namibia/?utm_source > accessed August 14, 2025
[3] https://aecweek.com/angolas-60b-oil-gas-boom-opportunities-ahead/> accessed August 14, 2025
[4] https://www.mozambiqueexpert.com/en/mozambique-lng-projects-in-the-rovuma-basin/> accessed August 14, 2025
[5] There is a potential conflict between the provisions of section 86 of the new Nigerian Tax Act (“NTA”) and section 233(11) of the PIA as well as the Decommissioning and Abandonment (“D&A”) Regulations. Section 86 of the NTA portends a clear departure from the PIA’s framework by introducing a tax deductibility requirement that is not currently contemplated by the PIA; that is, the requirement to deposit a minimum of 30% of the D&A Fund with a Nigerian bank as a prerequisite for tax deductibility. Unlike section 233(11) of the PIA, which permits tax deductibility upon contribution to a qualifying escrow account, section 86 of the NTA expressly withholds such benefit unless the threshold is met. This presents another of such policy uncertainties that impact investors’ decisions, contributing to slower attainment of PIA promises.