Five years after the Petroleum Industry Act, PIA, came into force, stakeholders in Nigeria’s oil and gas sector are calling for the Federal Government to address remaining implementation gaps, warning that regulatory uncertainty could discourage investment, limit production growth and threaten energy security.
The concerns were raised at the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, Energy and Labour Summit in Abuja.
The summit examined the impact of the PIA since its enactment in 2021 and considered measures needed to attract more investment, increase oil and gas production and strengthen domestic energy security.
Speaking on the theme, “The PIA: Assessing Implementation, Industry Impact, Investment Response and the Road Ahead for Nigeria’s Oil and Gas Sector,” oil and gas expert Solomon Orieji said one of the Act’s major achievements was addressing uncertainty surrounding some of Nigeria’s key deepwater assets.
Orieji explained that five major deepwater assets, responsible for about 80 per cent of the country’s deepwater production, were developed under commercial agreements signed in 1993 for 30 years.
As the agreements approached expiration in 2023, investors became uncertain about the legal framework that would determine the future of their interests and additional investments.
He said the PIA, enacted in 2021, helped resolve the uncertainty by providing a framework for renewing and renegotiating the production-sharing contracts.
According to Orieji, this was an important investment gain because companies would have been reluctant to inject fresh capital into assets whose contractual future remained unclear.
Investment and Production Remain Key Tests
Dr Mohammed Malah said the next assessment of the PIA should focus on whether its regulatory reforms are translating into actual investment and higher production.
Malah noted that the Act had introduced major institutional changes, including clearer divisions between upstream, midstream and downstream operations, the transformation of the Nigerian National Petroleum Corporation into a commercial entity and the inclusion of host communities in the petroleum framework.
However, he stressed that legislation by itself cannot increase oil production.
He said investment, infrastructure, skilled manpower, technology and effective implementation were necessary to turn the reforms into measurable industry growth.
Malah argued that the real indicators of the PIA’s success should include the volume of capital actually committed and deployed, production growth and the economic value generated for Nigeria.
He also warned against treating investment announcements as evidence of actual capital deployment, noting that financing costs, insecurity, infrastructure challenges and the ageing of existing oil assets would continue to affect investment and production decisions.
PIA Attracts New Gas and Midstream Investments
Okechukwu Nwankwo said the PIA had already generated positive investment responses by creating a more predictable, legally backed regulatory environment and through the issuance of more than 20 regulations.
He highlighted several new final investment decisions and gas projects, including the Indorama Train 3 plant, Odum Energy, Ovade GPP, AGPCL and SIGP.
The projects, he said, have a combined processing capacity of about 810 million standard cubic feet.
Nwankwo also disclosed that the Midstream and Downstream Gas Infrastructure Fund, MDGIF, had invested more than N570 billion and helped attract over N2 trillion in additional investments.
He said the developments showed that the PIA was beginning to influence investment decisions, particularly in the gas and midstream sectors.
However, he said the next stage of implementation would require greater focus on market structure, energy security and regulatory effectiveness.
Nwankwo identified open and third-party access, tariffs, pricing, licensing, transparency, feedstock availability and strategic petroleum reserves as areas requiring further attention.
Stakeholders at the summit agreed that Nigeria’s main challenge five years after the PIA is to turn improved regulatory certainty into actual economic gains.
They said although the Act has moved the industry away from significant regulatory uncertainty towards a more structured investment environment, the ultimate benefits will depend on whether investors commit capital, projects are completed and the infrastructure and operating conditions needed to increase production are provided.
For investors, they noted that regulatory certainty can reduce risks and make long-term projects more attractive, but sustained growth in oil and gas production ultimately depends on actual capital deployment, project execution and a supportive operating environment.
