News Update


By Amaka Ezeno, MCLArb,

Nigeria joined the league of oil nations in 1956 when Shell discovered oil in commercial quantity in Oloibiri which is located in Bayelsa. According to Section 318 of the Petroleum Industry Act 2021 petroleum means “hydrocarbons and associated substances as exist in its natural state in strata, and includes crude oil, natural gas, condensate and mixtures of any of them, but does not include bitumen and coal.”

In general property law, the concept of ownership is described as not just a bundle of rights but a bundle of legal and equitable rights. The inherent rights are legal given that they are backed by law. They are also equitable because of the backing by common good. Therefore, ownership means that a person has certain entitlements to the property in consideration. The theories of ownership include:


This theory states that whoever owns the land upon which oil is found, is also the owner of the oil by way of right. It is based on the land law principle that quic quid plantatur solo solo cedit. It means that whoever owns the land owns whatever that is underneath it. This theory also finds expression in the Latin maxim, cujus est solum, ejus est ‘usque ad coelum et ad inferos’ which means that the owner of land owns everything above it and beneath it.


This theory presents the perspective that oil and gas is a natural phenomenon incapable of being owned. It has been described as animal, having the power and the tendency to escape without the volition of the owner. Their fugitive and wandering existence within the limits of a particular tract is uncertain.

Therefore, the oil belongs to the owner of the land, and are part of it, so long as they are on or in it, and are subject to his control, but when it escapes and goes into another land, or come under another’s control, the title of the former owner ceases to be. Possession of the land, therefore, is not necessarily possession of the oil.


This theory builds on the reins of the absolute ownership theory. It states that no person can be said to own oil or gas by merely being the owner of the land on which such resource is found. Instead, such owner of the land must show that he has come across the oil and extracted same. Therefore, according to this theory, where oil is found in a person’s land and such a person has no knowledge of the oil or made any effort/preparations to extract the oil, then there is no ownership.

In the same vein, if oil seeps from the person’s land to another’s, the right of ownership is gone too. In the foreign case of Ohio Oil Company v. Indiana (1900) 44 ED. 729 the United States Supreme Court held that although every man has exclusive interest in his land, the forgoing resources do not become his own unless he has shown efforts exerted to access and capture such resources.


This theory posits that all land and everything within it belong to the state. It grants the state an overriding interest in land and everything therein as against private citizens. This theory agrees with many legal provisions in Nigeria. Section 44(3) of the Constitution of the Federal Republic of Nigeria states thus,

Notwithstanding the forgoing provisions of this section, the entire property in and control of all minerals, mineral oils and natural gas in, under or upon any land in Nigeria or in, under or upon the territorial waters and the Exclusive Economic Zone of Nigeria shall vest in the Government of the Federation and shall be managed in such manner as may be prescribed by the National Assembly.

Similarly, Section 1 of the Land Use Act 1978 vests ownership of land in the government (state). Again, Section 1 of the Petroleum Industry Act 2021 reads: “the property and ownership of petroleum within Nigeria and its territorial waters, continental shelf and exclusive economic zone is vested in the Government of the Federation of Nigeria.” In A.G. Federation v. A.G. Abia (2002) 6 NWLR (Pt. 764) 542 the Supreme Court decided that only the Federal Government could lawfully exercise any form of power whether legislative, executive or judicial over the exclusive economic zone.