Business
PIA at 5: Nigeria’s oil reform faces fresh
investment, production test
By Victor Ahiuma-Young
Five years after the enactment of the Petroleum Industry Act (PIA), stakeholders in Nigeria’s oil and gas industry have called on the Federal Government to close outstanding implementation gaps, warning that unfinished reforms and regulatory uncertainty could undermine investment, production growth and the country’s energy security.
The concerns were raised at the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) Energy and Labour Summit in Abuja, where industry experts reviewed the impact of the PIA since its enactment in 2021 and examined what must be done to translate the reform into increased investment, higher production and stronger 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 its intervention at a critical period when uncertainty surrounding some of Nigeria’s major deepwater assets threatened future investment.
Orieji explained that five ajor deepwater assets, which account for about 80 per cent of Nigeria’s deepwater production, were developed under commercial agreements signed in 1993 for a 30-year period.
With the agreements approaching expiry by 2023, he said investors faced uncertainty over the legal framework that would govern the continuation of their interests and future capital commitments.
According to him, the PIA, enacted in 2021, helped to resolve the uncertainty and subsequently created a framework for the renewal and renegotiation of the production sharing contracts.
He said the development represented a major investment gain because investors would have been reluctant to commit additional capital to assets whose contractual future was uncertain.
Orieji, however, cautioned against measuring the success of the PIA solely by the regulatory certainty it created.
For Dr Mohammed Malah, the next measure of success must be the extent to which the regulatory framework actually delivers investment and production.
Malah said the PIA had achieved significant institutional reforms, including clearer separation of upstream, midstream and downstream functions, restructuring of the Nigerian National Petroleum Corporation into a commercial entity and the incorporation of host communities into the petroleum framework.
But he warned that the legal framework alone could not produce additional barrels.
“The law itself does not produce a barrel,” he said, stressing that investment, infrastructure, human capacity, technology and effective implementation were required to translate reform into industry performance.
Malah therefore argued that the most important indicators of the PIA’s success should be the amount of capital committed and spent, production growth and the value ultimately delivered to the Nigerian economy.
He cautioned that investment announcements should not be confused with actual capital deployment, noting that financing costs, security challenges, infrastructure constraints and the maturity of existing assets would continue to influence investment decisions and production.
Providing evidence of the investment response already generated by the Act, Okechukwu Nwankwo said the PIA had produced positive outcomes through a more predictable, statute-backed regulatory regime and the issuance of more than 20 regulations.
He cited new final investment decisions and gas projects, including the Indorama Train 3 plant, Odum Energy, Ovade GPP, AGPCL and SIGP, with the projects having a combined processing capacity of about 810 million standard cubic feet.
Nwankwo also said the Midstream and Downstream Gas Infrastructure Fund (MDGIF) had invested more than N570 billion and catalysed over N2 trillion in investment.
He said the figures demonstrated that the PIA had begun to influence investment decisions, particularly across the gas and midstream segments.
However, Nwankwo said the next phase of implementation would require stronger attention to market architecture, energy security and regulatory delivery.
He identified outstanding issues around open and third-party access, tariffs, pricing, licences, transparency, feedstock supply and strategic petroleum stocks as areas requiring further action if the investment response is to deepen.
The assessments at the summit highlighted the central challenge facing Nigeria’s petroleum industry five years into the PIA.
The stakeholders were of the view that while the country has moved from significant regulatory uncertainty towards a more defined investment framework, the real economic payoff will depend on converting investor confidence into committed capital, operational projects and additional production.
For investors, stakeholders noted, the distinction remains critical. Regulatory certainty can reduce risk and improve the attractiveness of long-term projects, but sustained production growth ultimately depends on whether capital is deployed, projects are completed and the necessary infrastructure and operating environment are provided.
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