A new legal and regulatory analysis by Tope Adebayo LP found that reforms introduced under the Petroleum Industry Act (PIA) 2021, alongside recent executive orders issued by President Bola Tinubu, have improved investor confidence, enhanced regulatory certainty and created a more attractive environment for gas development.
Despite the progress, the report cautioned that significant infrastructure deficits and implementation challenges continue to limit the industry's full potential.
Domestic Gas Consumption Records Strong Growth
According to figures cited in the report, domestic gas sales increased from 49.3 billion standard cubic feet (bscf) in January 2022 to 64.2 bscf in January 2025.
The growth reflects increasing activity within Nigeria's domestic gas market and signals that reforms aimed at boosting local gas utilisation are beginning to produce measurable results.
Nigeria possesses more than 206 trillion cubic feet of proven natural gas reserves, making it one of Africa's largest gas-rich nations. However, for decades, the country has struggled to fully harness these resources due to underinvestment, inadequate infrastructure, regulatory uncertainty and persistent gas flaring.
The report argues that recent policy changes are helping to reverse that trend.
PIA Described as a Landmark Reform
In its report titled "From Policy to Practice: Legal and Regulatory Drivers of Nigeria’s Domestic Gas Market Under the PIA and Recent Executive Orders," Tope Adebayo LP described the Petroleum Industry Act as a watershed moment for Nigeria's energy sector.
According to the firm:
“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 law introduced sweeping structural reforms, including the creation of separate regulatory agencies responsible for overseeing upstream operations and midstream/downstream activities.
Analysts believe these changes have improved governance, streamlined oversight and reduced regulatory bottlenecks that previously discouraged investment.
Domestic Gas Supply Framework Strengthens Market
A key pillar of the reform agenda is the Domestic Gas Delivery Obligation (DGDO) framework, which requires producers to allocate specific volumes of gas to the domestic market.
The framework is designed to ensure reliable gas supplies for strategic sectors such as electricity generation, manufacturing and industrial production.
Importantly, the system includes enforceable penalties for companies that fail to meet their domestic supply obligations, providing stronger incentives for compliance.
The report noted that this intervention has contributed to improvements in gas availability and overall supply performance across the country.
Progress in Gas Utilisation and Flare Reduction
Beyond boosting domestic supply, reforms have also encouraged more efficient utilisation of gas resources that were previously wasted through flaring.
According to the analysis, Nigeria has recorded modest reductions in gas flaring while expanding the scope of the Nigerian Gas Flare Commercialisation Programme.
Several flare sites have already been auctioned to investors interested in converting wasted gas into commercially viable products, helping to reduce environmental impacts while creating new economic opportunities.
The report highlighted these developments as evidence that policy reforms are beginning to deliver benefits across multiple segments of the gas value chain.
Investment Climate Improving
The legal analysis also pointed to improvements in Nigeria's investment environment following a series of executive orders and presidential directives aimed at attracting capital into the energy sector.
Measures introduced by the Federal Government include:
- Tax incentives for investors.
- Faster project approval and contracting processes.
- More flexible local content requirements.
- Enhanced support for infrastructure development.
According to Tope Adebayo LP:
“These interventions signal a deliberate effort by the government to improve project economics and enhance Nigeria’s competitiveness as a destination for gas investments.”
Industry stakeholders have long argued that reducing bureaucratic delays and improving investment returns are essential to unlocking Nigeria's vast gas potential.
Infrastructure Deficits Still a Major Challenge
Despite the encouraging progress, the report warned that policy reforms alone cannot guarantee the development of a fully functional domestic gas market.
Several longstanding challenges continue to hinder growth, including inadequate pipeline networks, limited processing facilities, payment risks within the electricity sector and unresolved legacy debts.
The firm stated:
“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.”
Analysts noted that while the legal framework has improved significantly, translating policy into practical outcomes remains one of the sector's biggest hurdles.
Unlocking the Promise of Nigeria’s ‘Decade of Gas’
To realise the objectives of Nigeria's Decade of Gas initiative, the report stressed the need for continued investment across the entire gas value chain.
This includes expanding:
- Gas processing facilities.
- Transmission and distribution pipelines.
- Transportation networks.
- Storage infrastructure.
- Industrial gas utilisation projects.
The report also called for stronger institutional coordination and consistent regulatory enforcement to ensure that reforms achieve their intended impact.
Outlook
The findings suggest that Nigeria's gas sector is moving in a positive direction, supported by reforms that have improved transparency, investment attractiveness and market structure.
However, the next phase of growth will depend less on policy announcements and more on execution. While the foundations for a stronger domestic gas market have been established, experts say sustained infrastructure investment and regulatory consistency will determine whether Nigeria can fully leverage its vast gas reserves and achieve long-term energy security.
As the report concluded, the country must bridge the gap between legal reforms and operational realities if it hopes to unlock the full economic promise of its gas resources and deliver on the ambitions of the Decade of Gas programme.