WHO BEARS THE BURDEN? ORPHANED OIL ASSETS AND DECOMMISSIONING OBLIGATIONS IN NIGERIA UNDER THE PETROLEUM INDUSTRY ACT 2021

Abstract

This study examined orphaned oil and gas assets as significant legal, environmental, and financial challenges in petroleum producing jurisdictions, particularly Nigeria. It analysed the Petroleum Industry Act (PIA) and its framework for decommissioning and abandonment (D&A), focusing on funding mechanisms, regulatory oversight, and compliance obligations for license holders. The study found that the PIA improved the previously fragmented regulatory regime by establishing clear decommissioning obligations and dedicated abandonment funds, thereby enhancing financial preparedness and regulatory control. However, important gaps remain. Ambiguities persist regarding residual liability where decommissioning funds are insufficient, especially when operators become insolvent or fail to meet their obligations. Uncertainties also exist concerning the responsibilities of regulators and the state, as well as the legal framework for third party intervention in decommissioning activities. The study concluded that the PIA, despite its reforms, does not fully eliminate the risk of orphaned assets and recommended further legal and institutional strengthening.