The Petroleum Industry Act and Nigeria’s Gas Value Chain: Prospects for Processing, Transmission, and Distribution

Abstract

The Petroleum Industry Act (PIA) of 2021 represents the most comprehensive legislative overhaul of Nigeria’s oil and gas sector in decades. This paper critically examines the Act’s provisions and their implications for the country’s gas value chain, with particular attention to processing, transmission, and distribution. Employing a qualitative research design, the study conducts a thematic analysis of existing literature, official documents, and expert commentary to infer potential outcomes from the PIA’s implementation. Findings reveal that Nigeria possesses vast proven gas reserves of approximately 209 trillion cubic feet (TCF), yet continues to grapple with chronic flaring and infrastructural bottlenecks. Strategic midstream projects — including the Obiafu–Obrikom–Oben (OB3) pipeline with an estimated capacity of 2,000 MMSCF/d and emerging Floating Liquefied Natural Gas (FLNG) initiatives — are central to domestic gas monetization, but remain vulnerable to execution delays, financing challenges, and security risks. The PIA introduces a more robust legal and fiscal framework that aims to address long-standing constraints such as regulatory uncertainty, inadequate infrastructure, and underinvestment. Key innovations include clearer delineation of regulatory roles between the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), streamlined licensing pathways, and the creation of a dedicated gas infrastructure fund. These provisions are designed to reduce legal ambiguities and incentivize private capital inflows. However, critical subordinate regulations covering tariff methodologies, network codes, and gas aggregation mechanisms are still required to operationalize these reforms effectively. Despite its promise, the PIA faces significant risks. Administrative inefficiencies, delays in secondary legislation, and persistent insecurity in gas-producing regions could undermine progress. Furthermore, sustained investor confidence will hinge on transparent, consistent, and effective enforcement by the newly established regulatory institutions. The study concludes that the PIA presents a transformative opportunity for Nigeria’s gas sector. If implemented coherently, it could accelerate gas processing, transmission, and distribution while converting flared and stranded volumes into feedstock for domestic industries and reliable supply for the power sector. Policy recommendations include the rapid publication of secondary regulations, consolidation of offtake frameworks, provision of fiscal and credit support for FLNG and processing projects, and a combined enforcement-plus-incentives approach to eliminate routine flaring. Ultimately, while challenges persist, the PIA offers a viable pathway to unlocking Nigeria’s vast gas potential and positioning gas as the cornerstone of the nation’s energy transition and industrial development.