Decommissioning of Oil and Gas Installations in Nigeria: A Critical Appraisal of the Impacts of the Petroleum Industry Act 2021

Abstract

The discovery of petroleum in Nigeria paved the way for massive exploration and production activities together with equipment used to produce petroleum hydrocarbon. Decommissioning relating to the removal of both used and unused installations was not adequately provided for by previous regulatory regimes in line with international best practice. In addition, the issue of liability for the funding of the removal of oil and gas installations after their lifespan must be addressed. Bearing in mind the development of international law in this regard, the Petroleum Industry Act (PIA) 2021 was passed by the Nigerian Government with a view to addressing these challenges as most installations in Nigeria will be nearing the end of their lifespan. This paper therefore, appraises the innovations of the PIA on the removal of used and disused oil and gas installations in Nigeria. The paper adopts the doctrinal approach by examining and evaluating past and present attempts for the decommissioning of oil and gas installations.  The findings revealed that apart from repealing the Petroleum Act, 1969, the PIA also created two regulatory bodies responsible for the decommissioning of oil and gas installations for the upstream and the midstream and downstream sectors, which were hitherto absent. The paper concludes that the innovations introduced by the PIA for decommissioning in Nigeria’s oil and gas sector will engender international best practices and good governance, transparency, accountability for fostering favourable business environment for the upstream, midstream and downstream sectors.