Unitisation in the Nigerian Oil and Gas Industry

This chapter examines the legal and institutional framework governing unitisation within Nigeria’s oil and gas sector, identifying prevalent practical challenges and proposing legal solutions. Unitisation, a globally recognised practice, provides a framework for the collaborative development of oil and gas fields that extend across multiple contractual areas. As investment in Nigeria’s oil and gas industry continues to grow, unitisation agreements are becoming increasingly common, with the potential for further expansion in the future. To support the efficient and environmentally responsible development of unitised fields in Nigeria, a variety of laws, regulations and guidelines have been established. These address obligations and key requirements within unitisation contracts, rules for non-contracted areas, and considerations related to royalties, taxes, environmental compliance and local content. Despite these regulatory efforts, challenges persist due to the migratory nature of oil and gas, which fosters competitive drilling and resource depletion. The chapter is structured into five sections: an introduction, an overview of oil and gas regulation in Nigeria, a discussion of the legal framework for unitisation in section 8.3—which covers existing legislation, rules, and guidelines—an examination of the legal challenges impeding effective unitisation and exploration of innovative solutions in section 8.4, and a concluding section 8.5.