- The Petroleum Industry Act (PIA) intends to bring structural reforms to Nigeria’s oil sector, addressing transparency, contract allocation, and regulatory oversight.
- The country’s oil history dates back to 1956, when Shell-BP discovered oil in Oloibiri, Bayelsa State, sparking large-scale extraction in the Niger Delta.
Despite enacting the Petroleum Industry Act (PIA) in 2021, Nigeria’s oil sector struggles with governance issues that undermine transparency, efficiency, and investor confidence. Industry experts and stakeholders warn that political interference, corruption, and regulatory inefficiencies persist, hindering the sector’s full potential.
Politics and corruption have shaped Nigeria’s oil industry for decades, affecting policy direction and regulatory enforcement. While Nigeria remains one of Africa’s largest oil producers, policy inconsistencies, legal uncertainties, and a lack of transparency have slowed industry growth and deterred investment.
The country’s oil history dates back to 1956, when Shell-BP discovered oil in Oloibiri, Bayelsa State, sparking large-scale extraction in the Niger Delta. However, governance challenges have persisted, creating deep-seated inefficiencies across the industry.
Industry analysts argue that powerful elites have exploited regulatory gaps, allowing multi-national oil companies and their local partners to benefit disproportionately at the expense of host communities. Despite contributing over 85% of Nigeria’s export earnings and 60% of its budget revenue, many oil-producing regions remain marginalised and underdeveloped.
The 2020/2021 marginal fields bid round, designed to enhance Indigenous participation in oil exploration, became another example of political manipulation and opacity. Concerns over lack of transparency in the award of oil licenses have continued to plague the process, reinforcing doubts about the effectiveness of Nigeria’s oil governance structures.
A significant recent development was Shell’s $1.3 billion divestment from its Nigerian onshore subsidiary, Shell Petroleum Development Company (SPDC), to Renaissance Africa Energy Company Limited. While the deal received government approval in December 2024, it has sparked fears among stakeholders about the fate of long-standing environmental liabilities in the Niger Delta.
Decades of oil spills and environmental degradation have devastated farmlands and water sources, with communities fearing that Shell’s exit may leave unresolved pollution challenges. Remediation efforts, such as those in Ogoniland, remain slow and inadequate, raising questions about enforcing environmental accountability in Nigeria’s extractive sector.
The Petroleum Industry Act (PIA) was intended to bring structural reforms to Nigeria’s oil sector, addressing transparency, contract allocation, and regulatory oversight. The law introduces new frameworks for licensing, oil block allocation, and host community engagement, yet its implementation remains inconsistent and heavily politicised.
According to the Human and Environmental Development Agenda (HEDA) Resource Centre, the marginal fields programme, which was conceptualised to empower Indigenous oil companies, has been riddled with bid manipulation, regulatory weaknesses, and political favouritism.
HEDA’s report highlights how politically connected companies—some with no prior experience in oil exploration—were awarded contracts over technically qualified bidders. The lack of corporate accountability and regulatory independence fuels public distrust in Nigeria’s oil governance.
Industry experts and advocacy groups have called for stronger institutional frameworks to address these challenges.
- Olanrewaju Suraju, Chairman of HEDA Resource Centre, criticised the allocation of oil contracts to unregistered firms, emphasising the need for due diligence and regulatory transparency.
- Dr Orji Ogbonnaya Orji, Executive Secretary of NEITI, stressed that social and environmental justice must complement financial transparency in oil sector reforms.
- Auwal Musa Rafsanjani, Executive Director of CISLAC and Head of Transparency International-Nigeria (TI-Nigeria) warned that oil theft, subsidy fraud, and weak regulations continue to undermine Nigeria’s economic growth.
- Prof. Dayo Ayoade, an energy expert, noted that while regulatory oversight has slightly improved, political interference and conflicts between regulatory bodies continue to stall progress.
- Dr. Ayodele Oni, an Energy Partner at Bloomfield, argued that the PIA’s effectiveness depends on strict and unbiased enforcement rather than mere legislative intent.
As Nigeria prepares for future oil block allocations in 2025, many believe the country stands at a crossroads. Without meaningful reforms, corruption, policy inconsistencies, and regulatory inefficiencies will continue to limit the sector’s growth, preventing Nigeria from maximising its vast petroleum resources.
The PIA may be a step in the right direction, but until transparency, accountability, and environmental justice become non-negotiable standards, the sector will remain plagued by the same governance failures that have persisted for decades.