Market News

By Dare Olawin

Nigeria’s domestic gas market recorded a significant increase in sales, rising by about 30 per cent between January 2022 and January 2025, driven by reforms under the Petroleum Industry Act 2021 and recent executive orders by President Bola Tinubu, according to a legal analysis by Tope Adebayo LP.

The Lagos-based full-service law firm said in a statement made available to our correspondent that the reforms have improved regulatory clarity, fiscal attractiveness and investor confidence across the gas value chain, even as infrastructure gaps and implementation challenges continue to slow the pace of growth.

It stated that Nigeria, which holds more than 206 trillion cubic feet of proven gas reserves, has long struggled to convert its resource base into domestic energy supply due to underinvestment, weak infrastructure and gas flaring.

According to data cited in the report, domestic gas sales rose from 49.3bscf in January 2022 to 64.2bscf in January 2025, reflecting the gains attributed to ongoing reforms under the PIA.

The report noted that the legislation marked a turning point for the sector.

“The PIA represents the most comprehensive reform of Nigeria’s petroleum sector in decades and has established a stronger foundation for domestic gas development through regulatory clarity, pricing liberalisation mechanisms, infrastructure support and enhanced investment incentives,” the firm stated in a report titled ‘From Policy to Practice: Legal and Regulatory Drivers of Nigeria’s Domestic Gas Market Under the PIA and Recent Executive Orders’.

It explained that structural reforms under the Act, including the creation of separate regulatory authorities for upstream and midstream/downstream operations, have helped to improve oversight and reduce regulatory bottlenecks.

The analysis also highlighted the Domestic Gas Delivery Obligation framework as a key intervention aimed at boosting supply to strategic sectors such as power generation and industry. The framework includes enforceable penalties for non-compliance.

It further noted improvements in gas utilisation and supply performance, alongside modest reductions in gas flaring and the expansion of the Nigerian Gas Flare Commercialisation Programme, which it said has seen multiple flare sites auctioned for monetisation projects.

Beyond production measures, the PIA, it stated, introduced open-access provisions for infrastructure, partial liberalisation of gas pricing and the establishment of the Midstream and Downstream Gas Infrastructure Fund to support investments in processing, transportation and distribution.

The law firm maintained that recent executive orders and presidential directives have also strengthened the investment climate through tax incentives, faster contracting timelines and more flexible local content implementation.

“These interventions signal a deliberate effort by the government to improve project economics and enhance Nigeria’s competitiveness as a destination for gas investments,” Tope Adebayo LP noted.

However, the firm warned that policy gains alone are insufficient to deliver the market’s full potential.

“Large-scale outcomes remain constrained by persistent infrastructure gaps, payment risks within the power sector, legacy debts, and implementation inefficiencies. The transition from policy to practice is clearly underway, but it remains incomplete,” it stated.

According to the analysis, achieving a fully functional and scalable domestic gas market will require sustained investment in pipelines, processing facilities, transportation networks and distribution systems, alongside stronger institutional coordination and consistent regulatory execution.

The report stated that the foundations had been laid, but long-term success would depend on effective implementation and continued market reforms. It added that, to unlock the full promise of the Decade of Gas initiative, Nigeria must bridge the gap between legal design and operational reality.