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The Petroleum Industry Act (PIA): a law that will revolutionize
Nigeria’s oil industry

Both houses of the Nigerian Parliament adopted
the hydrocarbon sector reform on July 1, 2021.
This new law, led by Chief Timipre Sylva, Nige-
ria’s Minister of Petroleum Resources, marks an
important turning point insofar as it endorses a
paradigm shift and meets the expectations of ac-
tors in the oil industry. The two chambers took
more than ten years to reach an agreement on
the law’s content. However, despite President Oil tanker off Lagos, Nigeria
Buhari’s sincere political commitment, successive The State will ensure control of foreign exchange
Senate and House sessions have struggled to pass in rural areas by affirming its desire to protect
provisions for substantial reforms in the oil and artisanal producers. It is reasonable to view this
gas sector. The bill rests on a simple observation: as a strong incentive for producers to join the na-
the current challenges faced in the oil sector are tional economic cycle. The PIA will also help curb
the result of an inadequate regulatory framework. serious crime in Nigeria. Indeed, the activity of
In fact, Africa’s largest black gold producer is still terrorist and insurgent armed groups is often
struggling to draw in enough foreign investors. In concentrated around the control of deposits and
addition to structural problems, the Covid-pande- resources. The law includes a particularly promi-
mic and the acceleration of the energy transition sing component in terms of the energy transition.
are also contributing factors to Nigeria’s econo- Indeed, the Senate approved a mechanism to fi-
mic hardship in recent years. In order to increa- nance 30% of the profits of the NNPC from oil
se its reserves and production to 40 billion bar- and gas in favor of border basins. This fund will
rels and 3 million bpd respectively by mid -the be used for oil exploration in border states.
2020s, Nigeria has undertaken to completely In addition, the law also offers particularly encou-
overhaul the oil industry. Furthermore, the PIA raging economic prospects. The Federal Govern-
proposed by President Buhari set a legal and fis- ment has also undertaken to measure the impact
cal framework, making it particularly relevant. of the implementation of the PIA. According to
The law addresses tax evasion in particular, while government forecasts, the PIA will increase Nige-
also ensuring legalization of the extraction and ria's oil production capacity by about 317%, from
artisanal refinement of gas and oil. 1.2 million barrels per day to 4 million.

oil rig in the yards. Apapa, Port of Lagos, Nigeria

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