Nigeria’s Oil Governance Crossroads: Proposed Amendments To The PIA And The Dangers Of Making The Referee A Player

Introduction

According to the Editorial Board of Africa Oil and Gas Report, the Nigerian oil and gas industry is geared towards exponential reform as the Honourable Attorney General of the Federation hinted at the approval of President Ahmed Tinubu to an amendment of the Petroleum Industry Act.¹ According to the editorial, the Petroleum Industry Amendment Bill, 2025 (“the Bill”) seeks to amend sections 7, 8, 9, 47, 52, 53, 63, 64, 85, 104, 318 of the Petroleum Industry Act 2021 (PIA). In particular, a change to the governance structure of the Nigerian National Petroleum Company Limited (NNPC Ltd) has raised significant governance and operational concerns. The said amendments sought to be introduced by these sections include:

1. the constitution of a joint NUPRC and NMDPRA team for the technical regulation of the joint operations (section 7); 
2. an additional commercial regulatory function for NUPRC to act as the Federal government’s representative in all model contracts attached to the licences and leases, and replacing NNPC LTD as concessionaire in all profit sharing contracts (PSCs), and risk-sharing contracts (section 8);
3. the maintenance by NUPRC of the frontier exploration fund (section 9);
4. the maintenance of an authority fund by the NMDPRA (section 47);
5. the introduction of the supervisory powers of the Chief Executive of the NMDPRA in the management and administration of the midstream and downstream Gas Infrastructure Fund (section 52 (2));
6. the Ministry of Finance Incorporated (MOFI) becoming the sole shareholder of NNPC LTD, and thereby removing the equal shareholding accruing to Ministry of Petroleum Incorporated (MOPI) that existed in the extant PIA (Section 53) and saddling MOFI with the role of setting strategic direction, objectives and performance targets for the board (Section 63 and 64);
7. directing that money received from gas flaring penalties by the NUPRC be paid directly to the Federation account, thereby departing from the extant PIA which provides that such monies shall be paid in to the Midstream and Downstream Gas Infrastructure Fund which the penalties are levied (section 104 (4)); and 
8. an inclusion of the definition of “integrated operations” under section 318, which is the interpretation section of the PIA

The Minister of Finance introduced the Bill in July 2025, explaining that the proposed changes aim to tackle the increasing fiscal leakage and revenue loss faced by the Federation.

The Bill designates the NUPRC as the official governmental representative for all model contracts associated with the licenses and leases outlined in section 85 of the PIA. NUPRC will also replace NNPC Ltd as the concessionaire in all subsisting Production Sharing Contracts. In this role, the NUPRC will be responsible for evaluating and approving all relevant work programs and verifying and approving all contractor costs to determine cost-recoverable expenditure under these contracts.

This article aims to analyse the proposed amendments in the Bill regarding regulatory changes in the existing roles of the NUPRC, particularly section 8, which provides for the commercial regulatory functions of the NUPRC. We will analyse the implications of these changes on ethical standards and corporate governance structures, address the potential benefits and risks associated with the proposed modifications, and incorporate insights from similar legislative changes in other countries, thereby providing a broader understanding of their approaches and outcomes.

Historical Development of NNPC Ltd

The history of the governmental agencies which constitute the predecessors of the present NNPC Ltd is important. NNPC Ltd originated from a one man unit in the Mines Division of the Ministry of Lagos Affairs called the Hydrocarbon Section², which was established in 1958. By 1963, it had grown into a division due to the expanding oil industry. In 1970, it was elevated to the Department of Petroleum Resources under the Ministry of Mines and Power, and in 1975, it became the Ministry of Petroleum Resources... Nigeria became a member of the Organisation of Petroleum Exporting Countries (OPEC) in 1971, and to implement OPEC’s decisions, a governmental agency was necessary. Thus, in 1971, the Nigerian National Oil Corporation (NNOC) was established by decree No. 18 of 1971.³ The NNOC was established as the government's commercial entity in the petroleum industry, handling exploration, production, refining, and marketing of oil and gas products. However, it operated alongside the Federal Ministry of Petroleum Resources, which regulated oil companies. This separation led to administrative conflicts and ineffective control, prompting the idea that consolidating authority under a single organisation could better achieve the government's goals in the sector.⁴

NNOC later merged with the Federal Ministry of Petroleum Resources by virtue of Decree No. 33 of 1977, which also repealed the Nigerian National Oil Corporation Act of 1971 and dissolved the Federal Ministry of Petroleum Resources. The merger consolidated all policy, regulation, commercial operations and functions into the new Nigerian National Petroleum Corporation (NNPC) as a juristic person that could sue and be sued in its name. This decree also created the Petroleum Inspectorate as an integral part of the NNPC and entrusted it with the regulation of the petroleum industry. Thus NNPC began its life as an agency established by law to implement the Federal Government's policy on petroleum by the effective and active control (through the acquisition of participation interests in the major oil companies' working interests) and supervision of the operations of the oil companies to such a degree that in Nigerian petroleum matters, NNPC operated simultaneously as policy maker, regulator, and commercial participant.

In 1985, the Ministry of Petroleum Resources was re-established, and by March 1988, the Petroleum Inspectorate was transferred from NNPC to the Ministry, becoming the Department of Petroleum Resources (DPR). DPR regulated the entire petroleum industry, overseeing operations where NNPC was the majority joint venture partner.

The re-establishment of the Ministry of Petroleum Resources and the transfer of regulatory functions out of NNPC to the DPR were driven by the desire to eliminate conflicts of interest arising from NNPC acting simultaneously as operator, regulator, and policy executor, strengthen independent regulation, clarify institutional accountability, and separate commercial participation from regulatory and policy functions in the petroleum sector. 

The Structure Under the PIA

The PIA maintains the structure of having a separate regulator and national oil company by establishing the NUPRC as a replacement of the Upstream Division of the DPR. NUPRC’s role is limited to the regulation of all upstream petroleum operations, including technical, operational, and commercial activities.⁵ On the other hand, the PIA prescribes the incorporation of NNPC Ltd (as a commercial entity without recourse to public funds). NNPC Ltd holds Nigeria’s majority interest in the upstream and downstream sectors of the oil and gas industry, as the concessionaire of all Product Sharing Contracts, as well as other model oil and gas contracts.⁶

This arrangement is in accordance with the global Extractive Industries Transparency Initiative (EITI), a framework that strengthens transparency to combat corruption, promote gender equity, improve revenue collection, and ensure natural resource wealth benefits the public. Nigeria adopted the EITI in 2003 to complement the series of reforms construed to redress its history of misgovernance and outright plunder of its commonwealth, prominent among which was oil money.⁷

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Footnotes

1. Editorial Board of Africa Oil & Gas Report “PIA Amendment: Nigeria’s Finance Ministry to Take Over Petroleum; NUPRC Will Replace NNPC As Concessionaire” (Africa Oil & Gas Report 13 September 2025)PIA Amendment: Nigeria’s Finance Ministry to Take over Petroleum; NUPRC Will Replace NNPC As Concessionaire - Africa’s premier report on the oil, gas and energy landscape. accessed on 9 September 2025. 

2. NUPRC website, History – Nigerian Upstream Petroleum Regulatory Commission (NUPRC) accessed on 8 April 2026.

3. G Etikerentse, Nigerian Petroleum Law (2nd edn, Dredew Publishers 2004) 19–21

4. Ayomide Adekilekun “The Founding and Evolution of the Nigerian National Petroleum Corporation (NNPC)” (historicalnigeria, 9 October 2025) (NNPC: Formation of Nigerian National Petroleum Corporation) accessed 26 January 2026.

5. Section 5 & 6 of the PIA

6. Section 64 of the PIA

7. Nigeria Extractive Industries Transparency Initiative (NEITI), NEITI Strategic Plan 2022–2026 (NEITI 2022) 3 (https://neiti.gov.ng) accessed 20 April 2026.

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