The Economics of Decommissioning and Legal Risk for the Nigerian State: An Analytical Study of Aging Onshore Fields

This study analyses the economic and legal risks associated with the decommissioning of aging onshore petroleum fields in Nigeria, examining the adequacy of the PIA 2021's decommissioning fund framework in mitigating state financial exposure. Approximately 40 percent of Nigeria's onshore crude oil wells are over thirty years old, and the approaching decommissioning wave presents a potentially enormous fiscal and environmental liability for the Nigerian state. Using a combined analytical and empirical methodology, the research models decommissioning cost scenarios for three archetype aging onshore field types in the Niger Delta using published global decommissioning cost benchmarks adjusted for Nigerian conditions. These cost models are set against the PIA 2021's decommissioning fund requirements and assessed against operator financial capacity data from publicly available petroleum company accounts from 2021 to 2024. Findings indicate a systemic underfunding of decommissioning liabilities, particularly among indigenous operator companies that acquired onshore assets from IOC divestments without full liability assumption. The study recommends a mandatory independent decommissioning cost audit every five years and a government-managed decommissioning security escrow for high-risk operators. Keywords: decommissioning, legal risk, onshore petroleum fields, PIA 2021, aging infrastructure.