PIA, FX liberalisation reshape Nigeria’s oil,gas sector — Oni
By Yunus Yusuf
An energy expert , Dr Ayodele Oni, says that major policy reforms, including petrol subsidy removal, foreign exchange (FX) liberalisation and the implementation of the Petroleum Industry Act (PIA), have significantly reshaped Nigeria’s oil and gas sector over the past year.
Oni, said the sector has undergone a difficult but necessary transition driven by domestic policy shifts and global energy transition pressures.
Oni, a Partner and Chair of the Energy and Natural Resources Practice Group at Bloomfield Law Practice, disclosed this in an interview to review of the Nigeria’s oil and gas sector in 2025.
He described the removal of petrol subsidy as the most defining reform, exposing Premium Motor Spirit (PMS) prices to market forces and fundamentally altering the downstream sector.
According to him, while the short-lived proposal to impose import tariffs on fuel created temporary uncertainty, deregulation has largely pushed the market toward greater transparency and competition, despite rising logistics costs, FX volatility and tighter margins for operators.
Oni noted that the gas sector recorded the strongest gains in 2025, with increased production, reduced flaring and stronger investor interest driven by government initiatives such as the Decade of Gas, pricing reforms and infrastructure development.
Gas utilisation for power generation and compressed natural gas (CNG) vehicles expanded significantly, while key pipeline projects improved connectivity between supply hubs, industries and export markets.
Overall, he said the sector is in a challenging but transformative phase, where subsidy removal, rising gas utilisation, regulatory reforms and renewable-driven investment shifts are laying the foundation for a more competitive and resilient energy industry.
In the downstream sector, Oni said fuel subsidy removal and FX liberalisation triggered a painful structural reset, leading to reduced profitability for many operators due to higher PMS prices, rising diesel and logistics costs, and increased working-capital risks.
He explained that while larger and better-capitalised players such as the Nigerian National Petroleum Company Limited (NNPCL) and firms aligned with the Dangote Refinery proved more resilient, the market has shifted from a state-dominated import model to a more competitive, private-sector-led environment.
He said, however, high capital requirements, infrastructure gaps and FX risks have limited the scale of new market entrants, with the most significant impact coming from domestic refining rather than retail startups.
On regulation, Oni said the PIA has addressed long-standing concerns around regulatory inconsistency, contract transparency and fiscal uncertainty that previously weakened Nigeria’s licensing rounds.
He noted that the 2024 licensing round, the first conducted under the PIA by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), was widely praised for its transparency and digitalised bid process, which reduced discretion and improved investor confidence.
According to the NUPRC, gas production improved steadily in 2025, with reduced flaring and higher domestic supply.
“As of July 2025, 27.82 per cent of gas output was supplied domestically, while gas-to-power supply averaged 862.86 million standard cubic feet per day.
“Nigeria also recorded a rare milestone in July 2025 as gas flaring fell to 7.16 per cent, even as daily gas production rose to 7.59 billion standard cubic feet, reinforcing progress toward the country’s 2030 zero-flare target.
“Key pipeline projects also advanced, including the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline, which achieved the River Niger crossing.
“And is expected to reach mechanical completion by the end of 2025, and the Obiafu-Obrikom-Oben (OB3) pipeline, which has begun delivering gas to power plants,” he added.
These developments, Oni said, have improved domestic supply, supported exports and strengthened enforcement of domestic gas delivery obligations.
In the downstream segment, hr said, domestic fuel supply improved significantly following the commencement of operations at the Dangote Refinery, which now supplies about 40 per cent of Nigeria’s PMS needs, sharply reducing reliance on imports.
Hr said that the data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) showed that fuel imports fell by 58.5 per cent between October 2024 and September 2025, easing pressure on foreign exchange and saving billions of naira.
However, Oni noted that the continued underperformance of state-owned refineries has limited domestic supply, leaving Nigeria partially dependent on imports.
He argued that Nigeria’s crude oil production remained volatile in 2025, averaging between 1.4 million and 1.7 million barrels per day, below the national target of 2.1 million barrels per day, largely due to oil theft, pipeline vandalism and ageing infrastructure.
Still, he acknowledged recent progress, with the NUPRC reporting crude-oil losses of just 9,600 barrels per day in July 2025, the lowest level in nearly 16 years, alongside new legislative efforts to strengthen enforcement.
Oni said that while security challenges and IOC divestments continue to weigh on upstream investment, recent reforms have positioned Nigeria’s oil and gas sector for stronger long-term growth if policy consistency is sustained.
