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Introduction
The proposed Petroleum Industry Act (Amendment) Bill 2025 (the "Bill") marks a new phase in the Nigeria's petroleum sector reforms. The Bill proposes significant adjustments to the Petroleum Industry Act 2021 ("PIA"). The Bill was introduced by the Nigerian Parliament in July 2025 to further strengthen fiscal management, delineate regulatory responsibilities and efficiently consolidate government ownership structures.1 The Bill seeks to achieve institutional and regulatory restructuring, the reallocation of concessionaire and contractual roles, the adjustment of corporate shareholding in the Nigerian National Petroleum Company Limited ("NNPCL"), and the governance of non-performing oil assets. Key areas addressed by the Bill includes activities that fall within the jurisdiction of the regulators of the upstream sector, the Nigerian Upstream Regulatory Commission (the "Commission") and mid and downstream sector, the Nigerian Midstream and Downstream Regulatory Authority (the "Authority"), the funding of frontier exploration and remediation, the extent to which the regulators may act as contractors, and the consideration of a single shareholder structure for NNPCL. The changes that the Bill seeks to bring are largely welcomed, considering the stale position of the legislative framework of oil and gas industry prior to the PIA. In this article, we examine the core amendments that the Bill seeks to introduce while highlighting its institutional, commercial, and governance implications. The article concludes with key recommendations to preserve regulatory clarity, fiscal transparency, and investor confidence.
Key Proposed Amendments to the PIA
Integrated Operation
The Bill seeks to amend the PIA by expanding the mandate of the Commission to include regulatory function over "integrated operations", where upstream and midstream activities are combined.2 The definition of "integrated operations" in the Bill is framed around clear objective criteria, including demonstrable operational linkage across petroleum value-chain stages, geographical integration or strategic clustering of operations, and common ownership and operatorship. These elements appropriately narrow the scope of the definition and provide a reasonable basis for determining when joint regulatory function in this respect is triggered.
In carrying out this mandate, the Commission and the Authority are required to establish a "joint project team" to coordinate technical regulation, licensing and data-sharing responsibilities and the development of guidelines for the operation of integrated services under the supervision of the Minister. The Bill's express exclusion of Gas to Liquid plants, Liquified Natural Gas plants, petrochemical and fertiliser plants, gas processing facilities, and Compressed Natural Gas related infrastructure further enhances legal certainty by clearly delineating the boundary between integrated upstream–midstream projects and conventional midstream or gas-processing activities. The Bill introduces clearer definitions for "integrated operations" and "integrated strategic projects." The Bill seeks to encourage synergy between regulators and streamline compliance in large-scale integrated petroleum developments.3
However, this joint regulatory model may create overlapping jurisdictions and administrative bottlenecks. With both agencies exercising concurrent authority, operators could face conflicting directives or slower project approvals. In a sector where investment decisions hinge on speed and certainty, such dual oversight may dampen efficiency and deter capital inflows. Accordingly, while the definition itself is sufficiently detailed, clarity will still be required at the implementation level, particularly on leadership, decision-making hierarchy, and approval timelines within joint project teams to ensure that the regulatory objectives of the Bill are achieved without undermining efficiency or investor confidence.
Funding Frontier Exploration and Remediation.
The Bill seeks to remodify the "Frontier Exploration Fund" to be maintained by the Commission (the "Fund").4 The Fund will be financed through The National Assembly appropriations not exceeding five percent (5%) of government "profit oil" or "profit gas" from Production Sharing Contracts, Profit Sharing Contracts, and Risk Service Contracts in the previous year.5 The Bill will require all contracting parties (existing and future) to remit royalty oil and tax payments directly into the Federation Account. This will replace the current regime under which thirty percent (30%) of NNPCL's profit from oil and gas was reserved for frontier exploration. 6 This amendment is very much welcomed as in the past four years of the PIA's enactment, only the NNPCL's profit has been used to finance the Fund. The Fund will be used to carry out exploration and development activities in the frontier acreages. However, clarification may be required on how contracts that are not government-allocated would contribute to the Fund.
While the amendment reduces the NNPCL's fiscal burden and enhances parliamentary oversight, it also introduces funding uncertainty for long-term exploration in frontier basins, which require enormous, sustained capital commitments. Similarly, the deletion of subsection (5) of Section 9 of the PIA, which provided for a dedicated escrow account, removes a layer of financial autonomy from exploration initiatives.7 A balance should be struck between fiscal prudence and exploration continuity.
The passing of the Bill will carve a new posture which places the Midstream and Downstream Gas Infrastructure Fund ("MDGIF") under the supervision of the Authority's Chief Executive. 8
The Bill redefines the "Authority Fund" 9 for which money accruing to the Authority, including one percent (1%) of the cost of collection from the Commission will be paid. This proposed amendment enhances the Authority's financial independence but is paired with strong audit and disclosure provisions to ensure accountability.10
Also, under the PIA, gas-flaring penalties accrued to the Commission are expressly earmarked for application towards environmental remediation and relief of affected host communities. The Bill, however, proposes that such gas-flaring penalties be paid directly into the Federation Account, with no corresponding provision for host community remediation. The removal of this earmarking mechanism represents a material departure from the PIA's host-community-centred approach and may undermine trust and confidence among host communities, particularly in relation to the environmental accountability of petroleum operations11
Regulator as Contractor
One of the most consequential amendments that the Bill proposes is the transfer of the government's concessionaire role in Production Sharing Contracts ("PSCs"), Profit Sharing Contracts, and Risk Service Contracts from NNPCL to the Commission. This seems to position the Commission as both an industry contractor and regulator. 12 The current position of PSCs in the PIA allows the NNPCL to act as the concessionaire, thereby allowing the Commission to focus wholly on its regulatory function.
Under global best practice, regulatory and commercial functions are distinct. For instance, in Norway, the Petroleum Directorate regulates while Petoro manages the state's commercial interests. 13 In Brazil, there is also clear-cut separation between the Agencia National do Petroleo which focuses on regulatory work from Petrobras which focuses on commercial work. 14 In Ghana there is a clear-cut distinction between the Petroleum Commission and The Ghana National Oil Company. 15 However, where the Commission's concessionaire role is confined to fiscal terms (e.g., equity participation and profit shares) without broader contractual terms or commercial obligations, this may not render the Commission as a "contractor" in the full sense that NNPCL currently is. Unlike current NUPRC-approved PSCs where NNPCL enters full contracts with operational, fiduciary, and non-fiscal terms (e.g., Joint Venture Agreements, work obligations), the Bill does not specify if the Commission's new concessionaire role entails similar breadth or is limited to fiscal terms. Absent such clarity, it risks turning the regulator into a true commercial contractor, eroding separation of roles.
The Bill moves to reallocate the concessionaire role to make the Commission a party to purely contractual clauses with little fiscal flavour. The Bill also alters the balance of state participation in petroleum contracts. The Commission would now hold up to sixty percent (60%) equity participation as a bid parameter, replacing NNPCL's position in joint ventures and production-sharing frameworks. Without clear statutory delineation, this creates ambiguity over fiscal obligations, cost recovery, and profit distribution mechanisms. 16 A revised governance framework distinguishing fiduciary state participation from commercial engagement is necessary to prevent functional overlap and ensure transparency, the avoidance of conflict of interest and investor trust.17
Ministry of Finance Incorporated as Sole Nominal Shareholder
The Bill proposes changes in the corporate governance structure of NNPCL. 18 The amendments vest beneficial ownership of the NNPCL entirely in the Federation with the Ministry of Finance Incorporated ("MOFI") serving as the sole nominal shareholder on record as against the position under the PIA. 19 Further, the Bill seeks to remove the Ministry of Petroleum Incorporated ("MOPI") from the shareholding structure, consolidating fiscal control within MOFI. MOFI will also have authority to increase NNPCL's equity capital and oversee share sales or transfers, provided such transactions occur transparently and at fair market value. These changes enhance clarity and minimize potential conflicts, aligns with MOFI's broader mandate as the primary holder of Federal Government assets while leveraging on its more robust governance framework compared to MOPI.
This restructuring strengthens fiscal oversight, simplifies ownership and eliminates the dual accountability structure that balanced fiscal and technical interests. This restructuring is also consistent with the broader mandate of MOFI as the first-choice holder of the Federal Government Assets generally, and recognizes the fact that MOFI already has in place, elaborate governance that MOPI arguably does not have.
Conclusion
The Petroleum Industry Amendment Bill 2025 represents a critical juncture for Nigeria's oil and gas sector. Its objectives of enhancing efficiency, fiscal oversight, and government revenue generation are commendable. However, certain provisions risk conflating regulatory and commercial roles, weakening environmental protection, and concentrating ownership authority. For Nigeria to achieve the Bill's intended outcomes, the amendment process must be guided by the principles of clarity, accountability, and transparency. Reforms that strengthen governance while sustaining investor confidence will ensure that the PIA's promise of stability and growth is not compromised.
Footnotes
1 https://placng.org/i/wp-content/uploads/2025/10/Senate-order-paper-Wednesday-8th-October2025-.pdf accessed in October 2025.
2 Section 2 of the Bill.
3 Section 12 of the Bill.
4 Section 4 of the Bill.
5 Section 13 of the Bill.
6 The Seventh Schedule of the PIA and Section 9 of the PIA.
7 Section 4 of the Bill
8 Section 5 of the Bill.
9 Section 47 of the PIA.
10 Section 5 of the Bill.
11 Section 11 of the Bill.
12 Section 10 of the Bill and Section 85 of the PIA.
13 https://www.norskpetroleum.no/en/framework/state-organisation-of-petroleum-activites/
14 OECD (2022), Regulatory Reform in Brazil, OECD Reviews of Regulatory Reform, OECD Publishing, Paris, https://doi.org/10.1787/d81c15d7-en.
16 Section 10(b) of the Bill.
17 Section 8 of the Bill.
18 Sections, 7,9 and 14 of the Bill.
19 Section 53(3) of the PIA
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