Nigeria has a long-established and mature upstream oil and gas industry which traces its origins to the discovery of crude oil in commercial quantities in 1956 at Oloibiri, in present-day Bayelsa State, following the drilling of Well Oloibiri-1 by Shell (then referred to as Shell-BP). Commercial production commenced in 1958, marking the beginning of sustained exploration and production activities that have since evolved into one of Africa’s largest and most mature upstream petroleum sectors.

Nigeria’s upstream oil and gas industry has been shaped by the long-standing participation of major international oil companies, including Shell, ExxonMobil, Chevron, TotalEnergies and Eni, alongside a strong and expanding group of indigenous operators such as Seplat Energy, Aradel, Aiteo, Oando Energy Resources, ND Western and First E&P. According to the Nigerian Upstream Regulatory Commission NUPRC (the regulatory body responsible for overseeing the affairs of the upstream oil and gas industry), Nigeria’s proven crude oil and condensate reserves stood at approximately 37.50 billion barrels, comprising about 31.56 billion barrels of crude and 5.94 billion barrels of condensate . The same reserve report indicated total natural gas resources of 209.26 trillion cubic feet (‘TCF’), with associated gas at roughly 102.59 TCF and non-associated gas at about 106.67 TCF , reaffirming Nigeria’s substantial hydrocarbon resource base.

Landmark achievements include the successful development of world-class deep-water projects such as Bonga Field and Egina Field, the latter developed at a cost of over US$16 billion and producing at peak rates of about 200,000 barrels per day. There is also a rapid growth of large-scale gas monetisation and LNG exports through Nigeria LNG, with six operational LNG trains and capacity exceeding 22 million tonnes per annum.

In terms of production levels, as at December, 2025, Nigeria’s average daily crude oil production was reported to be approximately 1.5 million barrels per day (mbpd) . Nigeria also holds a strong position in the global natural gas market, as domestic natural gas output has averaged around 1.5 trillion cubic feet per annum over the last decade, much of it derived from associated gas produced with crude oil. Nigeria remains a major global exporter of liquefied natural gas (‘LNG’), ranking among the largest LNG exporters worldwide . Although specific LNG export rankings vary year-by-year, Nigeria has consistently featured among the top exporters, reflecting its role in global gas supply and export infrastructure. Taken together, these figures and developments demonstrate that Nigeria’s upstream petroleum sector is not only well established historically but continues to be of strategic global significance, underpinned by substantial reserves, structured regulatory reform and continued engagement by major international and indigenous oil and gas companies.

Rights to explore and exploit petroleum resources in Nigeria are administered by the Nigerian Upstream Petroleum Regulatory Commission (‘NUPRC’) pursuant to the Petroleum Industry Act, 2021 (PIA) . The legal basis for this authority is twofold. First, Section 44(3) of the Constitution of the Federal Republic of Nigeria 1999 (as amended) vests the entire ownership and control of all minerals, mineral oils and natural gas in, under or upon Nigerian territory, territorial waters and the Exclusive Economic Zone in the Federal Government, to be managed in such manner as may be prescribed by the National Assembly. This constitutional vesting provides the justification for a centralised, and federally administered upstream petroleum regime.

Second, the National Assembly exercised this constitutional mandate through the enactment of the Petroleum Industry Act (‘PIA’) 2021, which repealed the Petroleum Act 1969 and established a modern institutional framework for petroleum governance. Section 4 of the PIA established the Nigerian Upstream Regulatory Commission (‘NUPRC’) and designates the NUPRC as the technical and commercial regulator for upstream petroleum operations, with responsibility for administering licences and leases, supervising petroleum operations and enforcing compliance with applicable laws and regulations. While the Minister of Petroleum Resources retains overarching policy authority and formally consents to the grants of licences and leases (on behalf of the Federal Government of Nigeria), the day-to-day administration, renewal, supervision and enforcement of upstream rights is carried out by the NUPRC pursuant to Sections 6 and 7 of the PIA. Accordingly, upstream petroleum activities in Nigeria may only be undertaken pursuant to licences, leases or contractual arrangements issued and regulated under the PIA.

As highlighted earlier, the Petroleum Industry Act (PIA) is the primary legislation that governs activities in the upstream sector of Nigeria’s oil and gas industry. The regulatory regime under the PIA is primarily licence-based, supported by standard form contractual arrangements prescribed by statute. Rights to explore and produce petroleum are granted through statutory licences and leases, issued by the Minister on the recommendation of the NUPRC, typically following competitive bid rounds conducted in accordance with the provisions of Sections 73 and 74 of the PIA and applicable licensing round regulations. The principal upstream titles under the PIA are:

a. Petroleum Exploration Licence (‘PEL’): A PEL authorises non-exclusive reconnaissance activities, including geological, geophysical and geochemical surveys. Under Section 71(3) of the PIA, it is granted for an initial term of three years and may be renewed once for a further three years. A PEL does not confer drilling or production rights.

b. Petroleum Prospecting Licence (‘PPL’): A PPL confers exclusive rights to explore for petroleum and drill exploration and appraisal wells within the licence area. Pursuant to Section 77 of the PIA, onshore and shallow water PPLs are granted for an initial term of three years, renewable once for a further three years, while deep offshore and frontier basin PPLs are granted for an initial term of five years, renewable for an additional five years.

c. Petroleum Mining Lease (‘PML’): A PML is the production title granted following the declaration of a commercial discovery under a PPL. Under Section 86 of the PIA, a PML is granted for a maximum period of twenty years, inclusive of development and production, and may be renewed for successive twenty-year periods, subject to continued commercial production and regulatory compliance.

In addition to these statutory titles, the PIA recognises standard contractual arrangements applicable to upstream operations, including concession agreements, production sharing contracts, profit sharing contracts and risk service contracts. Notably, Section 64 of the PIA vests the Nigerian National Petroleum Company Limited (‘NNPC Limited’) as the concessionaire for all production sharing contracts on behalf of the Federation, with responsibility for lifting and marketing the government’s share of petroleum under such arrangements. All upstream licences and leases must be held by companies incorporated in Nigeria, in accordance with Section 95 of the PIA, and foreign operators are required to establish Nigerian subsidiaries in order to participate in upstream petroleum operations.

Nigeria operates a unified upstream regulatory regime for both onshore and offshore petroleum operations. The PIA applies uniformly to petroleum activities conducted on land, in inland waters, on the continental shelf and within Nigeria’s Exclusive Economic Zone. While the Act recognises different licence durations and fiscal terms for onshore, shallow water, deep offshore and frontier basin acreages, these distinctions do not amount to separate legal regimes. Accordingly, upstream rights across all terrains are governed by the same statutory framework, administered by the NUPRC, with terrain-specific variations addressed through licence terms, fiscal provisions and applicable regulations rather than through distinct legislation.

Section 70 of the Petroleum Industry Act provides for the licenses and leases related to upstream petroleum operations in Nigeria. These include the following:

a. Petroleum Exploration Licence (‘PEL’) – A Petroleum Exploration License issued by the NUPRC grants the holder the right to carry out petroleum exploration operations within the area provided for in the license. Section 71 of the Petroleum Industry Act 2021 provides that the duration of a PEL is three years, renewable once for a further three years. PELs may cover an area that includes petroleum prospecting licenses or petroleum mining leases, provided that the holders of such licenses or leases, shall have no obligation to purchase the results of any survey conducted under the PEL. Only companies incorporated in Nigeria may hold a PEL, as upstream rights may not be held by individuals or unincorporated foreign entities under the Act. It is important to note that, pursuant to the provisions of Section 71(10) of the PIA, the carrying out of geological or geochemical surveys for scientific or educational purposes in relation to petroleum do not require a PEL, where the results of such surveys are not for sale or commercial gain.

b. Petroleum Prospecting Licence (‘PPL’) – A Petroleum Prospecting License grants the holder exclusive rights to drill exploration and appraisal wells and non-exclusive right to carry out petroleum exploration operations within the licensed area. The PPL holder is also granted the right to carry away and dispose of crude oil or natural gas won or extracted during the drilling of exploration or appraisal wells as a result of production tests, subject to the fulfillment of obligations under the PIA. Under Section 72 of the Petroleum Industry Act 2021, onshore and shallow water PPLs are granted for an initial term of three years, renewable once for an additional three years, while deep offshore and frontier basin PPLs are granted for an initial term of five years, renewable for a further five years. Following a commercial discovery, the licensee may retain the discovery area for appraisal in accordance with the Act. PPLs are exclusive to a single licensee and are subject to mandatory relinquishment of acreage after the initial term, as prescribed by regulation. The licensee must execute approved work programmes, including seismic acquisition and drilling activities, and failure to meet these obligations may result in forfeiture. All PPL holders must submit a Field Development Plan following the declaration of a commercial discovery, typically within two years, for approval by the Nigerian Upstream Petroleum Regulatory Commission. Where reservoirs extend across adjoining licence areas, unitisation is mandatory to ensure optimal recovery.

c. Petroleum Mining Lease (‘PML’) – A Petroleum Mining Lease is granted to qualified applicants to win, work, carry away and dispose of crude oil, condensates and natural gas on an exclusive basis. The PML also grants the holder the right to drill exploration and appraisal wells and carry out the related test production on an exclusive basis, and carry out petroleum exploration operations on a non-exclusive basis. Pursuant to Section 81 of the Petroleum Industry Act 2021, a PML is granted for a period of twenty years, inclusive of development and production, and is renewable for further twenty-year term. The PIA provides that the grant of a PML shall be by an open, transparent, competitive, and non-discriminatory bidding process conducted by the NUPRC. It further provides that the winning bidder shall be determined by parameters which includes signature bonus, royalty interest, profit split/profit oil split, work program commitment, and any other parameter specified in the bid round. Notwithstanding the bidding parameters, the Act provides that where there is a bilateral or multi-lateral agreement between Nigeria and another country, the government may for strategic purpose and in return for substantive benefits to the nation, direct the Commission to negotiate and award a PML to a qualified investor identified in the treaty. A PML shall only be granted on the basis of a commitment from the applicable lessee to develop and produce the commercial discovery of crude oil or natural gas, or to restart or continue petroleum production in the area to which such lease relates.

Other key commercial and contractual considerations are discussed below:

d. Production Sharing Contracts, Profit Sharing Contracts and Concession Agreements: The PIA provides that the Nigerian National Petroleum Company Limited (the government owned oil company similar to Saudi Aramco and Petrobras), is vested as the concessionaire of all Production Sharing Contracts (PSC), Profit Sharing and Risk Service Contracts as the National oil company on behalf of the Federation. Historically, Nigeria deliberately adopted PSCs for deep offshore and inland basin acreages to attract international oil companies with the technical and financial capacity required to operate in such environments. This policy approach has been preserved and adapted under the provisions of Section 85 of the Petroleum Industry Act, 2021, which recognizes production sharing and profit-sharing arrangements as valid upstream commercial models. Section 85(2) (a-d) provides for the structure and form for Production Sharing Contract, Profit Sharing Contract, Risk Service Contract and Concession Agreement. The main distinctions lie in financial risk bearing, recovery of cost and distribution of profit, which may be in cash or share of petroleum produced. For example, in PSC’s, recovery of costs is from a share of production while for risk service contracts, recovery of cost may be by payment in cash or in kind from petroleum produced.

Nigeria does not presently operate a distinct legal or regulatory regime for unconventional hydrocarbons such as shale gas or tight oil. The Petroleum Industry Act does not contain provisions specifically addressing unconventional resource. However, it expressly excludes oil obtained from bituminous shale or similar stratified deposits from the statutory definition of petroleum. Bituminous shale is instead classified as a mineral under Section 164 of the Nigerian Minerals and Mining Act 2007 . To date, Nigeria has not developed commercial shale gas, shale oil or tight hydrocarbon production. Any future unconventional exploration would be subject either to the general upstream petroleum licensing framework under the Petroleum Industry Act or to mining licences under the mining legislation, depending on the nature of the resource, together with full compliance with environmental and health and safety laws. There is no dedicated shale or hydraulic fracturing regime comparable to those found in certain other jurisdictions.

The upstream oil and gas industry in Nigeria is regulated exclusively at the federal level. The Ministry of Petroleum Resources is responsible for petroleum policy formulation and for the formal grant of upstream licences and leases under the Petroleum Industry Act. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) is the principal technical and commercial regulator for upstream operations and is charged under Sections 4, 6 and 8 of the PIA with issuing and supervising licences, enforcing compliance, regulating fiscal obligations and administering health, safety and environmental standards. Environmental oversight is shared among federal agencies . The Federal Ministry of Environment grants Environmental Impact Assessment approvals under the Environmental Impact Assessment Act 1992. The National Environmental Standards and Regulations Enforcement Agency (‘NESREA’) monitors compliance with environmental regulations, while the National Oil Spill Detection and Response Agency (‘NOSDRA’) enforces oil spill response and liability under the NOSDRA Act .

Fiscal oversight is exercised by the Nigeria Revenue Service (formerly known as the Federal Inland Revenue Service FIRS), which administers hydrocarbon tax, company income tax and other petroleum related taxes. Nigerian content compliance is regulated by the Nigerian Content Development and Monitoring Board pursuant to the Nigerian Oil and Gas Industry Content Development Act 2010. State governments have no authority to grant or regulate upstream petroleum rights, although regional development bodies such as the Niger Delta Development Commission play a complementary role in community development.

Yes, the Federal Government of Nigeria is directly involved in the upstream oil and gas industry.

Under section 44(3) of the Constitution of the Federal Republic of Nigeria, the entire property in and control of all mineral resources, including petroleum and natural gas, is vested in the Federal Government of Nigeria. This constitutional ownership is exercised through a state-owned national oil company. The Federal Government’s participation in the upstream petroleum sector is carried out through the Nigerian National Petroleum Company Limited (‘NNPC Limited’), which is wholly owned by the Federation. NNPC Limited participates in upstream petroleum operations either as a concessionaire or as an equity participant in joint ventures and production sharing arrangements. Under the Petroleum Industry Act, the Federation, acting through NNPC Limited, is entitled to hold a carried interest of up to sixty per cent in upstream petroleum projects, particularly under production sharing contracts.

The Petroleum Industry Act restructured NNPC Limited into a commercially oriented company with share capital and an independent board of directors, operating on a profit-driven basis. Notwithstanding this commercialisation, NNPC Limited remains the sole Federal Government owned upstream petroleum company in Nigeria. Its subsidiary, the National Petroleum Development Company (NPDC), frequently operates upstream assets on behalf of the government’s participating interest.

Beyond direct participation through NNPC Limited, the Federal Government also exercises oversight and control over the upstream oil and gas industry through various ministries, departments, and agencies. These include regulatory and supervisory bodies established under the Petroleum Industry Act, which collectively superintend licensing, operations, compliance, and policy implementation across the upstream sector. There are no other federal government-owned companies engaged in upstream petroleum operations in Nigeria outside NNPC Limited and its subsidiaries.

There are certain special requirement and restrictions for foreign oil and gas companies operating in Nigeria’s upstream oil and gas industry. Firstly, all upstream licences and leases must be held by companies incorporated in Nigeria, requiring foreign investors/companies to establish Nigerian subsidiaries.

Secondly, all operators (including foreign companies) are primarily subject to the Nigerian Oil and Gas Industry Content Development Act, 2010 (the “NOGICD Act”), which makes Nigerian content compliance a core licensing/contracting condition. Section 7 of the Act provides that, in the bidding for any license, permit or interest and before carrying out any project in the Nigerian oil and gas industry, an operator shall submit a Nigerian Content Plan to the Nigerian Content Development and Monitoring Board, demonstrating compliance with the Nigerian content requirement of this Act. Section 12 further states that the Nigeria Content Plan must set out how the operator and their contractors will give first consideration to Nigerian goods and services, including specific examples showing how first consideration is considered and assessed by the operator in its evaluation of bids for goods and services required by the project. Section 28 further provides that Nigerians shall be given the first consideration for employment and training in any project executed by any operator or project promoter in the Nigerian oil and gas industry.

There are numerous regulatory and compliance considerations. Nevertheless, foreign companies may participate in upstream petroleum operations in Nigeria, provided they meet all applicable statutory, regulatory, and licensing requirements.

There are several statutes and subsidiary regulations governing the environmental, health and safety (‘EHS’) regime applicable to upstream oil and gas operations in Nigeria. The Petroleum Industry Act (the primary legislation governing activities in the oil and gas industry) empowers the NUPRC to ensure strict implementation of environmental policies, laws and regulations for upstream petroleum operations.

To give effect to the PIA’s EHS mandates, the NUPRC has gazetted specific regulations that operationalise safety and environmental compliance. They include the Upstream Petroleum Safety Regulations and the Upstream Petroleum Environmental Regulations of 2022.

Other important EHS legislations include the National Environmental Impact Assessment (EIA) Act and the National Oil Spill Detection and Response Act which established the National Oil Spill Detection and Response Agency (‘NOSDRA’). The EIA Act while not industry-specific, is cross-sectoral and applies to upstream oil and gas projects. Under the EIA Act, projects likely to have significant environmental impacts, such as field development, pipeline construction, and production facilities, must undergo a mandatory Environmental Impact Assessment and secure approval from the Federal Ministry of Environment before commencement. On the other hand, the NOSDRA oversees oil spill detection, response preparedness, and implementation of the National Oil Spill Contingency Plan. Although administered by the Ministry of Environment, it operates alongside the NUPRC to regulate spill reporting and response for oil industry operators.

The Nigerian government derives value from its upstream petroleum resources through a combination of taxes, royalties, production shares, profit shares, signature bonuses, production bonuses, renewal bonuses, rents, fees, fines and other levies. Section 258 of the PIA stipulates that all these payments be transferred into the Federation Account. Section 259 provides that the administration and collection of Government revenue in the petroleum industry shall be the function of the Federal Inland Revenue Service (now known as the Nigerian Revenue Service) and the NUPRC. The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) will be responsible for the determination and collection of gas flare penalty.

(a) Royalties and Related Payments:

Section 306 of the PIA provides that all petroleum produced, including production tests shall be subject to royalties as provided in the Seventh Schedule to the Act. Part III of the Seventh Schedule provides that all production of petroleum, including production tests, shall be subject to royalties on a non-discriminatory basis with respect to all licensee and lessees and shall be paid into the Federation Account and verified by the Commission. It further provides that the royalties applicable to crude oil and condensates shall be based on the fiscal oil price determined for the field at the measurement points under applicable regulations and guidelines, and this price shall be determined by the Commission on the basis of information supplied by the lessees and from non-confidential independent publications. Pursuant to the provisions of the PIA, the NUPRC has issued the Petroleum Royalty Regulations 2022, which provides for applicable royalty rates, royalty based on production, application of sliding scales for the determination of royalty, valuation for royalty purposes, fiscal price determination, amongst others.

(c) Taxes (Hydrocarbon Tax and Companies Income Tax):

i. Hydrocarbon Tax: Section 261 of the PIA provides that there shall be levied upon the profits of any company engaged in upstream petroleum operations in relation to crude oil tax to be known as hydrocarbon tax, which shall be charged and assessed upon it profits related to the operations and payable during each accounting period in accordance with the Act. Sections 260–301 of the PIA establishes the Hydrocarbon Tax (HT) regime applicable to upstream petroleum operations which includes provisions on assessable profits and losses, allowable deductions, amongst others.

ii. Companies Income Tax and Other Federal Taxes: Under Section 302 PIA, Companies Income Tax continues to apply to taxable petroleum operations without any prejudice to the provisions of the Companies Income Tax. The Nigeria Revenue Service (NRS) being the successor to the Federal Inland Revenue Service under the Nigeria Revenue Service (Establishment) Act, 2023 is responsible for the assessment, accounting and collection of Hydrocarbon Tax, Companies Income Tax, and other taxes as they relate to petroleum operations.

(d) Special Deductions and Incentives:

The PIA introduces a more investment-sensitive fiscal regime, including targeted deductions and incentives:

i. Capital Allowances: The fifth schedule of PIA provides for capital allowances on various petroleum related activities and provides such allowances for qualifying plant expenditure, qualifying pipeline expenditure, qualifying building expenditure and qualifying drilling expenditure at 20% for year 1 – 4, and 19% for the fifth year.

ii. Executive Incentives: The Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order, 2024 issued by the NUPRC provides for a broad range of tax incentives and exemptions applicable to petroleum operations. Some of these incentives and exemptions include tax credit incentives applicable to Non-Associated Gas greenfield developments in onshore and shallow water locations with first gas production on or before 1st January 2029, fiscal incentives for deep water oil and gas projects amongst others.

The Petroleum Industry Act expressly establishes domestic supply obligations in respect of crude oil and natural gas and further prescribes mandatory local content requirements as well as the regulatory conditions that must be satisfied for the export of petroleum and natural gas. They will be discussed as follows:

a) Domestic Supply Obligation: Section 109 of the PIA provides that the NUPRC may issue regulations or guidelines on the mechanism for the imposition of a domestic crude oil supply obligation on lessees of upstream petroleum operations, including applicable penalties. Pursuant to this provision, the NUPRC has issued the Domestic Crude Supply Obligations Regulations which contains provisions on the mathematical model for determining DCSO, percentages earmarked for domestic supply, enforcement, penalties and others. For Gas producers, Section 110 of the PIA empowers the Nigerian Midstream and Downstream Petroleum Regulatory Authority (‘NMDPRA’) to prescribe and allocate the domestic gas delivery obligation among all lessees before 1st March each year based on domestic gas demand requirements. The NMDPRA pursuant to this provision has also released the Domestic Gas Supply Obligations Regulations which contains provisions on lessees providing information on natural gas reserves, domestic gas demand requirement supply curve, work requirements, non-compliance, amongst others.

b) Local Content Requirements: Local contents requirement have been discussed in 7 above.

c) Export Restrictions: The Nigerian Upstream Petroleum Regulatory Commission issued the Guidelines for the Operationalization of the Advance Cargo Declaration Regulation on 17 June 2025 which is issued pursuant to section 10(1) of the Petroleum Industry Act, 2021. This Regulation aligns with the provisions of the Procedure Guide for the Determination of the Quantity and Quality of Petroleum and Petroleum Products in Nigeria. They establish a comprehensive regulatory framework governing the declaration, measurement, verification and documentation of exports of crude oil, condensates, natural gas liquids and petroleum products from all terminals and export points in Nigeria, and apply to all licensees, lessees and exporters of crude oil, natural gas, natural gas liquids and petroleum products in Nigeria. In summary, while these measures may not strictly be described as “restrictions,” the applicable regulations and procedures establish a fundamental compliance framework for the accurate declaration and tracking of petroleum exports, adherence to which is mandatory and subject to attendant regulatory consequences.

Yes, Nigeria’s regulatory regime includes clear, specific and enforceable decommissioning and abandonment obligations. Commendably, these decommissioning obligations have evolved over the last few years and are geared towards protecting the marine ecosystem, reducing the negative environmental impacts of offshore drilling activities and restoring the seabed back to its original position.

i. The 2021 PIA

More specifically, section 232 (1) of the 2021 Petroleum Industry Act (‘PIA’) “provides that the decommissioning and abandonment of petroleum wells, installations, structures, utilities, plants and pipelines for petroleum operations on land and offshore shall be conducted in accordance with (a) good international petroleum industry practice, and (b) guidelines issued by the relevant authority provided that the guidelines shall meet the standards prescribed by the International Maritime Organisation (IMO) on offshore petroleum installations and structures.”

Additionally, section 233 (1 and 2) of the PIA mandates that; “a lessee and licensee shall set up, maintain and manage a decommissioning and abandonment fund held by a financial institution, and this decommissioning and abandonment fund shall exclusively be used to pay for decommissioning and abandonment costs.” Again, the PIA seeks to ensure that decommissioning obligations guarantee that the marine environment (in which oil exploration was carried out) is suitable for future generations. In other words, offshore oil and gas companies have a duty to ensure that the long-term effects of offshore decommissioning are not detrimental to the environment in which they operate.

ii. The 2023 Nigeria Upstream Petroleum Decommissioning and Abandonment Regulations: Furthermore, Regulation 3(1) of the 2023 Nigeria Upstream Petroleum Decommissioning and Abandonment Regulations, (“Regulations”) provides that, a licensee or lessee engaged in upstream petroleum operations is required, within one year of the commencement of the applicable Regulations, to submit to the Commission, a decommissioning and abandonment plan, and where such a plan already exists, to submit an updated decommissioning and abandonment plan in accordance with the Regulations. Failure to establish and submit a decommissioning/abandonment plan to the relevant authority within the time prescribed is tantamount to an administrative penalty of Five Hundred Thousand Dollars (US$500,000) for each year of non-compliance.

From the above laws and regulatory provisions, it is manifestly clear that offshore operators do have a number of decommissioning obligations that must be complied with, and these decommissioning requirements/obligations are in consonance/compliance with the IMO’s Guidelines and Standards for the Removal of Offshore Installations and Structures on the Continental Shelf and in the Exclusive Economic Zone which is an international standard utilized by countries to regulate offshore decommissioning of petroleum installations.

The construction and operation of onshore and offshore oil and gas pipelines in Nigeria is regulated by a number of Acts and Regulatory regimes, as outlined below;

I. The 2021 Petroleum Industry Act (‘PIA’).

Under the PIA, the following licenses may be granted in connection with the construction and operation of onshore and offshore oil and gas pipelines;

a. Gas Transportation Pipeline Licence – Section 135 of the Petroleum Industry Act provides that the Nigerian Midstream and Downstream Petroleum Regulatory Authority may upon approval of an application and payment of prescribed fees, grant and issue a qualified person a gas transportation pipeline licence with the exclusive right to own, construct, operate and maintain a gas transportation pipeline within a route as defined in the licence for its own account with third party access provisions or as common carrier as stipulated in the licence.

b. Petroleum Liquids Transportation Pipeline Licence – Section 190 of the PIA, provides that the Nigerian Midstream and Downstream Petroleum Regulatory Authority may upon approval of an application and payment of prescribed fees, issue a qualified person the exclusive right to own, construct, operate and maintain a transportation pipeline for the bulk transportation of petroleum liquids within a route as defined in the license for its own account with third party access provisions or as common carrier as stipulated in the licence.
The holders of the respective licences described above, have an ongoing environmental compliance obligations in connection with the construction, operation and maintenance of the oil and gas pipelines. In applicable cases, the licence holder will be required to prepare and submit for an environmental management plan for approval and pay a prescribed financial contribution to an environmental remediation fund for the rehabilitation or management of negative environmental impacts of its activities and operations.

II. The 2022 Petroleum Pipeline Regulations – Part II (regulations 4 – 15) of this 2022 Regulations, provides the requirements for obtaining permits to survey, and licences to establish and construct pipelines, and ensure that pipeline development/construction is technically sound, financially viable, environmentally/socially responsible, and aligned with national objectives such as community development and local content participation.

The primary regulatory regime applicable to LNG liquefaction plants and LNG import terminals in Nigeria is the Petroleum Industry Act. Section 129(1)(d) of the PIA provides that, “the NMDPRA may upon approval of an application and payment of prescribed fees, grant and issue a qualified person a gas processing license, which shall permit the person to install and operate a Liquefied Natural Gas (LNG) plant, on its own account or on the basis of open access for customers as stipulated in the license”. An LNG liquefaction project requires a Gas Processing License from NMDPRA, as LNG plants are treated as gas processing facilities under the PIA. Depending on the project structure, additional approvals may be required, such as a gas transportation licence for associated pipelines, a bulk storage licence for LNG storage facilities, and an export permit for the export of LNG. Operators must also obtain Environmental Impact Assessment (EIA) approval from the Federal Ministry of Environment and comply with applicable construction, safety and operational permitting requirements.

With respect to existing infrastructure, the primary and most significant large-scale commercial LNG liquefaction facility in Nigeria, is operated by the Nigeria LNG Limited (NLNG) at Bonny Island, Rivers State. NLNG operates six liquefaction trains with a combined capacity of approximately 22 million tonnes per annum. A seventh train (Train 7) is presently under development to expand Nigeria’s LNG export capacity. Nigeria does not currently operate any LNG import terminals, as the country’s LNG sector remains predominantly export-oriented, with regulatory focus placed on liquefaction, export infrastructure and domestic gas utilization projects rather than LNG import facilities. However, there are a number of small scale/mini-LNG projects are being considered for development. These proposed mini-LNG plants are designed primarily for domestic use and not export designed liquefaction trains like the NLNG.

I. The regulatory regime applicable to gas storage.

Nigeria’s regulatory/legal framework for gas storage is principally anchored in the Petroleum Industry Act 2021 (‘PIA’). Under the PIA, the commercial storage of natural gas constitutes a regulated midstream activity and may only be undertaken pursuant to an appropriate license issued by the NMDPRA. In particular, Section 132 of the PIA establishes the bulk gas storage license, which applies to entities engaged in the storage of gas at scale for commercial purposes. Section 134 of the Act goes on to highlight the various conditions applicable to a bulk gas storage license which include provisions that allow a licensee (including its affiliates) to own and store natural gas from affiliated fields in bulk storage facilities, and also permit a licensee that operates as a wholesale gas customer or distributor to store gas for its own use, in each case subject to any applicable third-party access conditions in the license.

Additionally, the 2025 Midstream and Downstream Petroleum Operations Regulations issued by the NMPRA, adopts a phased permitting approach and require three distinct approvals for gas bulk storage projects including a license to establish, a permit to construct, and a license to operate. Regulations 80, 81 and 82 of the Regulations prescribe the conditions precedent for each stage, including technical design standards, safety systems, environmental compliance, host community obligations and financial capability. In effect, no bulk or large-scale gas storage facility may be lawfully developed or operated in Nigeria without NMDPRA approval at each stage of its lifecycle.

II. Gas storage facilities in Nigeria

Yes, there are several gas storage facilities in Nigeria which provides for the storage of Liquified Petroleum Gas and Liquified Natural Gas. Liquefied petroleum gas storage represents the most developed and commercially significant form of gas storage in Nigeria. An example is the A.A. Rano LPG Terminal in Lagos, which has an installed storage capacity of approximately 10,000 cubic metres. An example of an LNG storage facility is Greenville LNG, which provides cryogenic storage tanks to its larger customers. In the same vein, compressed natural gas (‘CNG’) storage also exists in Nigeria, although on a more limited and decentralized scale. CNG storage is typically integrated into gas compression and distribution facilities serving industrial users and transport applications. An example is the Green Fuels Limited gas compression facility, which operates an approximately 10.5 million standard cubic feet per day (mmscfd) compression and distribution system.

I. Gas transmission and distribution systems in Nigeria.

Yes, there is a gas transmission and distribution system in Nigeria. The three main gas transmission pipelines include the ELPS (Escravos-Lagos Pipeline System), the ongoing OB3 (Obiafu-Obrikum-Oben Pipeline) and the ongoing AKK (Ajaokuta-Kaduna-Kano) Pipeline. The ELPS owned by the NNPC Ltd and operated by the NGTPC (a subsidiary of NNPC Ltd), serves as the backbone of Western Nigeria, transporting gas from Gas Producers in the Niger Delta to power plants and industries in Southwest, Nigeria. Downstream of these trunk lines, are lower pressure distribution networks that serves urban/industrial clusters.

II. Ownership and regulation of gas distribution and transmission infrastructure in Nigeria

Ownership of gas transmission and distribution infrastructure in Nigeria is mixed. The core national transmission network remains largely government owned through NNPC Limited and its midstream subsidiaries, while both public and private sector participants may own and operate licensed transmission pipelines and distribution networks. In all cases, infrastructure ownership is subject to licensing, technical standards, regulation and continuous oversight by the NMDPRA.

Gas distribution and transmission is also regulated primarily by the provisions of the PIA and under the regulatory purview of NMDPRA. The Petroleum Industry Act empowers the NMDPRA to designate defined geographic areas as local distribution zones and to license gas distribution systems within those zones. This statutory mandate is implemented through the Gas Distribution Systems Regulations of 2023, which prohibit the undertaking of gas distribution without a gas distribution license. A gas distribution license is granted in respect of a specified local distribution zone and confers on the licensee the exclusive right to develop, own and operate the distribution network within that zone for a fixed term, subject to renewal and regulatory oversight. Licensees are required to design, construct and operate gas distribution pipelines, city gate stations, low-pressure pipelines and associated infrastructure to supply natural gas to industrial, commercial and residential customers in accordance with prescribed petroleum pipeline regulations as well as technical, safety and service standards.

The NMDPRA has commenced phased licensing rounds and has awarded gas distribution licences covering multiple local distribution zones across the country. Licensed distributors are responsible for developing last-mile gas infrastructure, including pipeline networks and ancillary facilities, and are subject to ongoing regulatory supervision in relation to safety, quality of service, investment commitments and reporting obligations.

III. Third-party access regime in Nigeria.

Nigeria’s legal framework also provides for a statutory third-party access regime. Additionally, section 179 of the Petroleum Industry Act 2021 establishes the principle of open and non-discriminatory access to facilities and infrastructure used for midstream petroleum operations, including gas transportation and network infrastructure, for the conveyance of marketable natural gas. Under that section, persons licensed to supply petroleum liquids are entitled to third-party access to such facilities and infrastructure on commercially viable terms, based on a cost-reflective pricing methodology, and in the manner prescribed by the Act, applicable regulations, codes and guidelines issued by the Nigerian Midstream and Downstream Petroleum Regulatory Authority. Pipeline and network operators are therefore required to grant access on transparent and non-discriminatory terms, subject to available capacity and compliance with applicable network rules. The NMDPRA is empowered under the Act to regulate access conditions, approve tariffs and mediate disputes relating to third-party access. In practical terms, while gas distribution licensees enjoy exclusive rights within their designated local distribution zones, the broader gas transmission system is subject to regulated third-party access. The legal and regulatory framework is designed to prevent discriminatory conduct and unjustified refusal of access, while balancing investor certainty with market openness.

In summary, Nigeria has an established gas transmission and distribution system governed by a comprehensive statutory and regulatory framework. Infrastructure ownership is shared between state-owned and private entities, all operating under licences issued by the NMDPRA. Third-party access to gas transportation infrastructure is legally mandated, and tariffs and access conditions are subject to regulatory oversight under the Petroleum Industry Act and its subsidiary regulations.

I. Nigeria’s downstream gas market is in transition from a historically government-dominated structure to a more competitive and increasingly privatized framework following the enactment of the Petroleum Industry Act 2021 (PIA). Historically, gas supply to end-users was dominated by the state-owned NNPC Limited and its gas marketing subsidiary, formerly the Nigerian Gas Marketing Company (NGMC), now Nigerian Gas Marketing Limited (NGML). While NGML remains a significant market participant, the PIA has opened the downstream gas sector to greater private sector participation, including independent gas marketers, licensed gas distributors and virtual pipeline operators supplying compressed natural gas (CNG) and mini-LNG. This is to say that the current market structure is therefore hybrid. Government-owned entities continue to play an important role, particularly in strategic supply and infrastructure, but private operators now participate actively across gas marketing, distribution and retail segments. The establishment of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (‘NMDPRA’) under the PIA has reinforced this shift by introducing a unified licensing and regulatory framework aimed at promoting competition and investment.

II. Yes, both industrial and commercial customers are generally able to choose their gas suppliers, particularly under “willing buyer, willing seller” arrangements. Supplier choice, however, remains constrained by infrastructure availability, including pipeline coverage and capacity, as well as the existence of exclusive gas distribution licenses within designated local distribution zones. Section 148(6) of the PIA permits gas distribution licenses to include third-party access obligations, allowing license holders to grant access to gas retailers or other distributors on negotiated terms, thereby supporting competitive supply where infrastructure is shared. Beyond sector-specific regulation, competition in the downstream gas market is subject to the Federal Competition and Consumer Protection Commission (FCCPC) under the Federal Competition and Consumer Protection Act 2018. The FCCPC, in collaboration with the NMDPRA, has powers to investigate and sanction anti-competitive conduct, including price fixing, market allocation and abuse of dominance. The NMDPRA is also empowered under the PIA to enforce open access and third-party access obligations across midstream and downstream gas infrastructure. Despite the liberalization framework, the market remains relatively concentrated, with a limited number of major gas marketers and infrastructure constraints continuing to affect effective competition. Nonetheless, customer choice is expanding, particularly for large users and in off-grid markets served by virtual pipelines, as Nigeria moves progressively toward a more competitive, private-sector-led downstream gas market.

Nigeria’s downstream gas market is regulated under 2 pillars; i.e., the legal instruments (laws & regulations), and the institutions (regulators) that apply and enforce the said laws and regulations.

a. Regulatory authority/Institutions – By virtue of the provision of Section 29 and 31 of the Petroleum Industry Act 2021 (‘PIA’), the Nigerian Midstream and Downstream Petroleum Regulatory Authority (‘NMDPRA’), is responsible for licensing and regulating midstream and downstream gas infrastructure, including gas processing facilities, gas transportation pipelines and networks, gas distribution systems, and bulk gas storage facilities. The Authority also issues and enforces pricing, market regulations, technical and safety standards applicable to such facilities, and oversees compliance with applicable environmental requirements in coordination with relevant environmental laws and institutions. The NMDPRA also regulates environmental and safety compliance in the downstream gas sector, working alongside the Federal Ministry of Environment, which oversees environmental impact assessments for major gas projects. The NMDPRA plays a key role in implementing gas flare reduction and commercialization policies, including licensing gas utilization projects aimed at capturing flared gas for domestic use or export.

b. Legal instruments (laws & regulations) – The PIA constitutes the foundational legislation governing downstream gas regulation and is designed to transition the market from a regulated, state-dominated structure to a more liberalised and competitive framework. The PIA and subsidiary regulations have established a framework for gas pricing. Section 122 and 123 of the PIA jointly empower the NMDPRA to set transportation and distribution tariffs. While the NUPRC administers domestic gas delivery obligations (‘DGDO’) itself, requiring producers to dedicate certain volumes to domestic customers. Once producers meet their DGDO, the NMDPRA oversees any further gas trading in the domestic market. Gas distribution networks are regulated through a zonal licensing regime under the PIA. A Gas Distribution License, usually granted for 25 years, grants an exclusive franchise within a designated geographical zone. Distribution licensees must comply with the Gas Distribution Systems Regulations 2023 and may be subject to third-party access commitments. The Nigerian Gas Transportation Network Code provides the contractual framework for non-discriminatory open access to gas pipelines across the major networks, subject to capacity.

Overall, the downstream gas market is regulated through a centralised licensing and oversight regime, with increasing emphasis on market liberalisation, infrastructure development and private sector participation, while retaining regulatory control over safety, pricing transition and access to essential facilities.

Yes, there has been a number of significant changes in governmental policies/regulations in the oil and gas sector in Nigeria.

a. Regulatory Enactments, Plans and changes.

i. The Petroleum Industry Act (2021) – One significant change in government policy was the enactment of the Petroleum Industry Act (‘PIA”) 2021, which was signed into law 2021. This Act overhauled the oil & gas sector by repealing the old Petroleum Act of 1969, corporatized the Nigerian National Petroleum Corporation (NNPC) into the Nigerian National Petroleum Company Limited (NNPC Ltd), and created two new regulators: the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) with new mandates. Finally, the PIA also overhauled the hitherto legal/governance frameworks, as well as the regulatory, administrative and fiscal terms, and host community engagements in the oil and gas sector.

ii. The Climate Change Act – In 2021, the Climate Change Act was passed, and it established a framework for net-zero targets and reduction of greenhouse gas (‘GHG’) emissions in Nigeria. The Act also seeks to address critical gaps in Nigeria’s response to climate change, and it further provides a solid background for effective climate action, climate change advocacy and potential legal redress.

iii. The National Energy Transition Plan (ETP) – More to the above, in August 2022, the Federal government launched the National Energy Transition Plan (ETP) which seeks to achieve net-zero emissions by 2060. This Plan has an ambitious plan of promoting natural gas as a substitute for diesel/petrol, reducing upstream emissions by circa 80%, and improving energy efficiency in the country.

b. Policy Reforms, Executive Orders, Licenses and Innovations.

i. Presidential Executive Order to Safeguard Federation Oil and Gas Revenues and Provide Regulatory Clarity, 2026 (Executive Order 9 of 2026) – Effective February 13, 2026, the President of the Federal Republic of Nigeria, President Bola Ahmed Tinubu, has issued an Executive Order directing that revenues from Nigeria’s oil and gas operations be paid directly into the Federation Account, with the aim of strengthening government earnings, improving transparency, and eliminating what the administration considers wasteful or duplicative fiscal structures within the current framework. Relying on Sections 5 and 44(3) of the Constitution, the Order reasserts federal ownership and control over petroleum resources and seeks to restore revenue flows to the three tiers of government that, according to the Presidency, were significantly reduced following the implementation of the Petroleum Industry Act (PIA).

The Order specifically removes several deductions previously allowed under the PIA. NNPC Limited will no longer retain the 30% management fee on profit oil and profit gas from production sharing and similar contracts, nor will it continue to receive the 30% allocation to the Frontier Exploration Fund; those revenues are now to be remitted to the Federation Account.

Operators under Production Sharing Contracts are now required to pay royalty oil, tax oil, profit oil, profit gas, and all other government entitlements directly to the Federation Account. In addition, gas flare penalties will no longer fund the Midstream and Downstream Gas Infrastructure Fund but will instead be paid into the Federation Account.

The Executive Order also aims to reposition NNPC Limited strictly as a commercial entity rather than a revenue-handling intermediary, while an inter-ministerial implementation committee has been established to oversee the transition and support a broader review of the PIA to address identified fiscal and structural concerns.

ii. Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024 – On the 28th of February 2024, President Bola Ahmed Tinubu, signed this Executive Order which sought to grant new tax allowances and incentives for petroleum and gas products. More specifically, this Order seeks to provide support to companies within the Nigerian oil and gas sector by providing certain fiscal incentives. The incentives include but are not limited to; tax credits to promote non-associated gas greenfield development, investment allowances to support gas utilization companies operating in the midstream oil and gas industry, and other proposed incentives specifically targeted at deep-water oil and gas projects. Essentially, the Order aims at positioning Nigeria’s deep offshore basin as a lucrative destination for global/international oil and gas investments.

iii. Presidential Directive on Local Content Compliance Requirements 2024 – Also signed by President Bola Ahmed Tinubu on the 28th of February 2024, this Order sought to reinforce and tighten Nigerian content obligations within the oil and gas industry. Additionally, the Directive aims to make the oil and gas sector more competitive, encourage local content enforcement/regulations on investments & operations, and guarantee investment-friendly operations within the sector.

iv. Presidential Directive on Reduction of Petroleum Sector Contracting Costs and Timelines 2024, – This Directive seeks to ensure faster project approvals and lower cost thresholds for oil and gas contracts. Key features of this Directive include; reduced contracting cycle, higher approval thresholds, extended contract durations and simplified approval processes. Ultimately, the Order aims at making Nigerian oil and gas projects more competitive globally.

v. Gas Trading Licence – More recently, the regulatory authorities have introduced gas-market innovations as well. For example, in December 2025, the NMDPRA granted the first regulated Gas Trading Licence to JEX Markets, which established Nigeria’s first Gas Trading License and Clearing House & Settlement Authorisation in accordance with section 159, of the PIA 2021 and the Gas Trading and Settlement Regulations 2023. This represents a shift away from bilateral deals toward a transparent, market-based trading environment. Similarly, on the 15th of December 2025, the NUPRC reported that it had relaunched the Nigeria Gas Flare Commercialisation Program (NGFCP) by awarding 28 flare gas permits to successful awardees. The advent of the NGFCP marks a pivotal shift from environmental liability to economic opportunity in Nigeria’s upstream petroleum sector, especially because, of the ambitious aim of capturing between 250 and 300 million standard cubic feet per day (‘mmscfd’) of currently flared gas.

vi. Fuel Subsidy Removal – In 2023, the Federal government ended fuel subsidies, which effectively deregulated downstream petroleum prices. This was accompanied by the liberalisation of the retail fuel market (market-based pricing) to restore fiscal balance and market signals.

I. Key challenges affecting Nigeria’s oil and gas industry, and the response(s) of the government and regulatory agencies.

Nigeria’s oil and gas sector faces a number of challenges, these include but are not limited to the following;

a) Security and Theft: Nigeria (more particularly, the Niger Delta region) has long been plagued by oil pipeline vandalism, crude theft (bunkering), and illicit refining. In response to this key challenge, the government and regulator (NUPRC) implemented a combination of military/police security operations, community engagement and technology initiatives. These measures have yielded impressive results; in July 2025, the NUPRC reported that crude losses from theft/losses had fallen to about 9,600 barrels per day, the lowest the country had seen in 16 years. The NUPRC credited this to collaboration with security agencies/operators/communities, metering across upstream facilities, and the 37 new approved pipeline evacuation routes. Criminal prosecution of vandals and illegal refineries have also been stepped up. However, despite these gains, security remain a constant concern whenever global oil prices are high.

b) Infrastructure Constraints: Nigeria’s aging oil and gas infrastructure, marked by limited pipeline networks, refineries and gas processing plants, hampers production and increases costs. Routine gas flaring is also a symptom of this inadequate and limited midstream capacity. The government has sought to address this challenge by introducing programs aimed at monetizing flare gas. For example, under the Gas Flare Commercialization Program (NGFP), the NUPRC in December 2025, issued permits to 28 successful awardees to capture and commercialize roughly 250-300 million standard cubic feet per day (mmscfd) of flared gas. This not only reduces Carbon dioxide emissions but also increases gas supply for power and industry.

c) Regulatory overlaps and hurdles: The oil and gas industry in Nigeria has a lot of regulatory agencies and authority that have overlapping functions/obligations. Agreeably, the existence of these multiple agencies creates the challenge of overlapping mandates which can create bureaucratic bottlenecks and needless administrative delays. In response to this challenge, the NUPRC has made decent efforts to streamline/combine overlapping regulatory agencies and institutions under the auspices of the 2021 PIA.

d) IOC divestments and potential skill gaps: Within the last decade, a good number of major International Oil Companies (IOCs) are divesting their onshore assets, and exiting the Nigerian oil and gas sector. This has no doubt created a lot of uncertainty and lacunas. Whilst this IOC divestments opens doors for indigenous oil and gas organization (for example, Seplat Energy, Dangote, Conoil, Green Energy, Oando, Famfa oil, amongst others), it raises concerns about the new operators’ capacity to manage large-scale assets, raise the needed capital, handle technical challenges and addresses potential skill gap(s).

Conclusively, the Nigerian government’s responses to key challenges within its oil and gas industry, have included major policy and regulatory reforms, most notably the passing of the 2021 PIA; the restructuring of the regulatory frameworks within the industry, creation of clearer fiscal rules and cost-recovery terms; and establishment of more specialized regulatory agencies (for example, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) amongst others. Collectively, these responses/efforts are aimed at restoring investor confidence within the sector, reducing the strain on the federal government, and aligning Nigeria with the global energy markets.

II. Impact of recent geopolitical tensions on the Nigerian Oil & gas industry.

a. Russian-Ukraine aggression/war: The Russian-Ukraine war triggered a global disruption of Russian oil and gas supply. This disrupted culminated into increased global oil & gas prices, thus creating both opportunities and challenges for Nigeria. With regards to opportunities, higher oil prices led to increased European demand for alternative gas suppliers, thus creating renewed interest in Nigerian LNG and additional avenues to boost government revenues. With regards to challenges, Nigeria struggled to fully benefit due to production challenges (aggravated by the COVID-19 pandemic), disruptions impacting upstream operations, ageing oil fields, and oil theft by unscrupulous elements.

b. OPEC, Production Agreements and Global Sanctions Regimes: Production agreements within the Organization of the Petroleum Exporting Countries (‘OPEC’) and global sanctions have significantly impacted the oil and gas sector in Nigeria. As a member of OPEC, Nigeria’s crude oil output is subject to agreed production quotas created to stabilise global markets. Whilst such agreements may support higher oil prices, they may potentially limit Nigeria’s allowable production levels, and this may negatively impact export volumes and revenue generation. Additionally, sanctions imposed on major producers such as Russia and Iran have reshaped global crude trade flows and intensified competition in certain export markets. These shifts have altered buyer relationships and pricing dynamics, thus requiring the Nigerian government to adapt to the ever-evolving geopolitical environment.

Yes, Nigeria has policies/regulatory requirements (in the oil and gas industry) that are gradually integrating low-carbon goals and reflect the global trend towards low-carbon energy transition. These include:

a) The Climate Change Act of 2021 – The Climate Change Act 2021 provides a legal framework and emissions target (net-zero around mid-century) for all sectors, including the oil and gas sector. The Act sets a long-term objective of achieving net-zero greenhouse gas emissions by 2060 and mandates the preparation of carbon budgets and sectoral emission reduction pathways. Although the Act applies economy-wide, its implications extend directly to the oil and gas sector, which remains one of Nigeria’s largest sources of emissions.

b) The Petroleum Industry Act (PIA) – The PIA also strengthened Nigeria’s longstanding ban on gas flaring. According to Section 108 of the Act all upstream operators must file a Gas Flaring Elimination and Monetisation Plan (‘FEMP’) as part of field development approval, and Section 104 of the Act gives the NUPRC powers to sanction unauthorised gas flaring. These PIA provisions are implemented and amplified by the 2023 Gas Flaring, Venting & Methane Emissions (Prevention of Waste And Pollution) Regulations. Similarly, under the Gas Flare Commercialisation Programme (‘NGFCP’), the NUPRC awarded a number of flare gas permits with the objective of commercializing and capturing circa 250-300 million standard cubic feet per day (‘mmscfd’) of flared gas, cutting carbon dioxide emissions (CO2) by an estimated 6 million tonnes annually. Regulators are enforcing flare reduction through competitive licensing and monitoring, effectively imposing a carbon-reduction requirement on the oil sector. Other laws/policies/regulatory requirements in the oil and gas industry that reflect the global trend towards low-carbon energy transition include; the Energy Transition Plan (‘ETP’), the Environmental Impact Assessment Act (‘EIA’).

I. Strategies/proposals relating to the production of hydrogen

The Nigerian government via the instrumentality of its ‘Energy Transition Plan’ (ETP) has elevated hydrogen production to a strategic priority, and is taking concrete steps to create a governance and incentive framework for hydrogen projects. Though no formal hydrogen production mandate exists yet, international partnerships are laying the groundwork. In 2024, the German-Nigerian Hydrogen Office (H2Uppp) launched studies and roadmaps for Nigeria’s hydrogen economy. The Energy Transition Plan, which was updated in 2024, identifies hydrogen (both “green” and “blue”) as a key component of Nigeria’s medium- and long-term energy mix and envisages the development of domestic production capacity and export-grade products as part of a hydrogen export strategy. The government views hydrogen as a long-term decarbonisation lever and Nigeria is positioning itself as a frontrunner in the global race towards a sustainable hydrogen economy.

II. Strategies/proposals relating to the the development of carbon capture, utilisation and storage facilities.

Although the development of Carbon Capture and Storage (CCUS) in Nigeria is still in its early stages, CCUS is recognized in Nigeria’s energy plans. The ‘Energy Transition Plan’ (ETP) includes “developing and adopting Carbon Capture Utilisation and Storage (CCUS)” in a bid to refine emission activities in the oil and gas sector. In the same vein, new industrial projects may be required to evaluate and apply CCUS, deploy CCUS in refining activities and or face stricter emissions limits. Although, no dedicated CCUS regulations have been enacted or gazetted, this strategic document (ETP) suggest that CCUS/CCS may be a long-term decarbonisation tool, more particularly relevant for oil and gas operations, LNG facilities, as well as Industrial plants (cement, fertiliser, etc.). This development does reflect Nigeria’s amenability to the global trend towards low-carbon transition. As this Energy Transition Plan crystalizes, we expect formal policies/laws to guide the oil and gas industry toward lower carbon footprints.