Abstract

This paper critically examines the regulation of Foreign Direct Investment (FDI) within Nigeria’s oil and gas sector, emphasising the enduring tension between economic exploitation and environmental sustainability. The historical trajectory of FDI in Nigeria’s petroleum industry, particularly in the post-independence era, reveals a deep-seated economic dependency on oil revenues, with FDI playing a pivotal role in state finance and national development narratives. Yet, this reliance has exposed structural weaknesses in Nigeria’s legal and regulatory architecture, notably through frameworks such as the 1986 Nigerian Investment Promotion Act (NIPA) and the more recent Petroleum Industry Act (PIA) of 2021. While both instruments aimed to modernise and liberalise the sector, they arguably continue to prioritise multinational corporate interests, often to the detriment of environmental integrity and local community welfare. Nigeria’s regulatory framework has struggled to embed sustainability and accountability in practice. My analysis extends this critique, arguing that reforms remain largely superficial, failing to address deeper structural issues at the heart of the country’s FDI strategy. Unless Nigeria adopts a radically reoriented legal and institutional framework that embeds environmental accountability at its core, it will remain caught in a cycle of extractive dependency undermining both national development and ecological sustainability. International investment agreements further constrain regulatory autonomy, reinforcing investor protections at the expense of environmental standards. In response, this paper advocates a bold recalibration of Nigeria’s FDI policy, integrating enforceable Environmental, Social, and Governance (ESG) principles with stronger institutional capacity. Comparative models, such as Norway’s regulatory approach, demonstrate how economic growth can be reconciled with environmental justice, an imperative if Nigeria is to avoid perpetuating unsustainable patterns of resource exploitation.