Stakeholders at a Port Harcourt roundtable say Nigeria’s investment treaties could expose the country to costly arbitration over environmental regulation, fossil fuel investments and oil asset divestments, asking the Federal Government to reform the framework
Civil society organisations, host-community representatives, researchers and other stakeholders have called on the federal government to review Nigeria’s bilateral investment treaties, warning that investor-protection provisions could constrain the country’s ability to enforce environmental regulations and pursue its energy transition policies.
The roundtable was convened by Policy Alert in partnership with the Social Development Integrated Network and ActionAid, with support from the Centre for Research on Multinational Corporations.
The participants focused particularly on ISDS provisions contained in Nigeria’s bilateral investment treaties, including the 1992 Nigeria-Netherlands Bilateral Investment Treaty (BIT).
ISDS is a mechanism that allows foreign investors to challenge certain government measures through international arbitration where they contend that their treaty-protected investment rights have been breached.
According to the communiqué, participants expressed concern that the provisions could create what they described as a “chilling effect” on the government’s willingness to introduce or enforce environmental and climate regulations because of the possibility of arbitration claims by investors.
They argued that the issue has become more significant as Nigeria attempts to balance continued investment in oil and gas with its stated commitment to an energy transition.
The participants identified Shell’s offshore investments in the Bonga field, the federal government’s Decade of Gas initiative and the continuing divestment of oil assets in the Niger Delta as developments that could expose the country to additional investment-related disputes.
They said the Bonga investment, in particular, illustrated the need for Nigeria to examine the potential legal consequences of its treaty commitments.
The stakeholders’ position follows renewed investment by Shell in Nigeria’s deepwater sector. In December 2024, Shell and its partners announced a final investment decision on the $5 billion Bonga North deepwater project, which PREMIUM TIMES reported was expected to increase Nigeria’s oil production capacity by about 110,000 barrels per day.
PREMIUM TIMES also reported that Shell announced a $2 billion offshore gas project with Sunlink Energies and Resources Limited, expected to supply gas to Nigeria LNG when completed.
The participants said such investments could become relevant to future disputes if subsequent government measures affect investors’ interests protected under applicable investment treaties.
The communiqué also questioned the legal and fiscal implications of Nigeria’s Decade of Gas initiative, arguing that the expansion of gas infrastructure could increase the volume of foreign investment potentially protected by investment treaties.
The stakeholders said this could create additional exposure to arbitration claims while potentially committing the country to fossil-fuel infrastructure for decades.
The federal government has presented gas as a key component of Nigeria’s energy transition and energy security strategy.
PREMIUM TIMES reported in July that the government had launched the National Grassroots LPG Penetration Programme as part of the Decade of Gas initiative, with the stated objective of expanding access to cooking gas across the country.
Government officials have also described domestic gas as central to Nigeria’s plans to expand energy access, power generation and industrial development.
The roundtable participants, however, said the government should assess the investment-treaty implications of expanding gas infrastructure before committing to further investments.
They recommended that the Federal Government conduct a comprehensive assessment of the potential ISDS exposure associated with the Decade of Gas initiative.
The stakeholders also linked ISDS concerns to the wave of oil asset divestments by international oil companies in the Niger Delta.
They argued that multinational companies exiting onshore operations while retaining offshore interests could create difficult questions over responsibility for historical pollution and environmental remediation.
The concerns follow growing scrutiny of oil-company divestments in Nigeria.
In March 2025, the Nigeria Extractive Industries Transparency Initiative said it would review 26 oil blocks valued at $6.03 billion involved in divestment transactions by five international oil companies, citing environmental concerns and other unresolved issues.
More recently, four organisations filed a lawsuit over TotalEnergies’ planned divestment, raising concerns about environmental liabilities and the lack of public disclosure concerning financial guarantees for remediation and compensation.
A separate PREMIUM TIMES report in July detailed internal Shell documents that, according to Amnesty International and partner organisations, put the company’s estimated onshore decommissioning liability at $10.9 billion, excluding environmental remediation. The report also raised questions about how legacy environmental liabilities would be addressed following Shell’s exit from onshore operations.
The Port Harcourt stakeholders said ISDS provisions could complicate attempts by the Nigerian government to impose post-divestment environmental obligations on foreign investors.
They called on the Nigerian Upstream Petroleum Regulatory Commission to establish binding requirements ensuring that companies settle or adequately secure legacy environmental liabilities before completing divestments.
The 1992 Nigeria-Netherlands BIT featured prominently in the discussions.
The participants said Nigeria should review and, where necessary, renegotiate existing bilateral investment treaties to ensure that treaty obligations do not undermine the government’s authority to regulate in the public interest.
The issue of Nigeria’s exposure to international investment arbitration is not theoretical.