Nigeria’s domestic gas market has expanded significantly, with sales rising by about 30 percent between January 2022 and January 2025, driven by reforms under the Petroleum Industry Act (PIA) 2021 and recent executive orders by President Bola Tinubu, according to a legal analysis.
The report by Lagos-based law firm Tope Adebayo LP said the growth reflects improved regulatory clarity, enhanced fiscal incentives and rising investor confidence across the country’s gas value chain, even though infrastructure gaps and implementation challenges continue to limit the sector’s full potential.
Nigeria holds more than 206 trillion cubic feet of proven gas reserves, among the largest in the world, but has historically struggled to convert its vast resource base into reliable domestic supply due to underinvestment, gas flaring and weak infrastructure.
According to data cited in the analysis, domestic gas sales increased from 49.3 billion standard cubic feet (bscf) in January 2022 to 64.2 bscf in January 2025, marking what the firm described as a measurable improvement linked to ongoing regulatory reforms.
The report said the Petroleum Industry Act represented a structural turning point for Nigeria’s energy sector, reshaping governance and investment frameworks after decades of fragmented regulation.
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“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 said 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’.
The legislation created separate regulatory bodies for upstream and midstream/downstream operations, a move intended to improve oversight, reduce bottlenecks and streamline investment approvals.
The analysis highlighted the Domestic Gas Delivery Obligation framework as a key policy instrument designed to ensure adequate supply to strategic sectors such as power generation, manufacturing and industrial users. The framework also includes enforcement mechanisms and penalties for non-compliance by producers.
It further noted gradual improvements in gas utilisation and supply efficiency, alongside modest progress in reducing gas flaring through the Nigerian Gas Flare Commercialisation Programme, which has involved the auctioning of flare sites for monetisation projects.
Beyond production reforms, the PIA introduced open-access provisions for gas infrastructure, partial liberalisation of pricing mechanisms and the establishment of the Midstream and Downstream Gas Infrastructure Fund to support investments in pipelines, processing plants and distribution networks.
The report said these reforms were complemented by recent executive orders and presidential directives under President Bola Tinubu, which have sought to improve investment conditions through tax incentives, streamlined contracting processes and more flexible local content requirements.
“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 said.
However, the firm warned that despite policy progress, structural constraints continue to hinder the sector’s growth trajectory.
“Large-scale outcomes remain constrained by persistent infrastructure gaps, payment risks within the power sector, legacy debts, and implementation inefficiencies,” the report stated. “The transition from policy to practice is clearly underway, but it remains incomplete.”
Industry stakeholders have long argued that Nigeria’s gas potential is hampered more by infrastructure and financing constraints than by resource scarcity, with pipeline shortages and unreliable offtake markets frequently cited as key bottlenecks.
The analysis concluded that achieving a fully functional domestic gas market will require sustained investment in infrastructure, stronger regulatory coordination and consistent policy execution across government institutions.
It added that while recent reforms have laid important foundations, Nigeria’s ambition to build a “Decade of Gas” economy will depend on closing the gap between legislative intent and operational delivery in the coming years
