Who Bears the Burden? Orphaned Oil Assets and Decommissioning Obligations in Nigeria Under the Petroleum Industry Act 2021

This study examined the growing challenge of orphaned oil and gas assets as a critical legal, environmental, and financial issue in petroleum-producing jurisdictions, with particular focus on Nigeria. It analysed the impact of the Petroleum Industry Act (PIA) in establishing a structured framework for decommissioning and abandonment (D&A), highlighting its introduction of mandatory funding mechanisms, regulatory oversight, and compliance obligations for license holders. The paper interrogated how liability for orphaned oil facilities was allocated under the Act and assessed whether the statutory provisions were sufficient to prevent asset abandonment and mitigate environmental risks. The analysis found that the PIA marked a significant departure from the previously fragmented and inadequate regulatory regime by embedding clear decommissioning obligations and requiring the establishment of dedicated abandonment funds. These measures were shown to enhance financial preparedness and regulatory control. However, the study also identified several unresolved issues within the framework. In particular, ambiguities persisted regarding residual liability in cases where decommissioning funds proved insufficient, as well as the extent of responsibility borne by regulators and the state when operators became insolvent or failed to meet their obligations. Furthermore, the paper evaluated the role of third-party intervention in executing decommissioning activities and noted gaps in the clarity of legal provisions governing such arrangements. It concluded that, despite its progressive reforms, the PIA did not fully eliminate the risk of orphaned assets. The study therefore argued that while primary liability was clearly placed on licensees, the ultimate burden could still shift to the state under certain circumstances. It recommended further legal and institutional strengthening to ensure comprehensive accountability and sustainable environmental protection