GRB 070125 is among the most energetic bursts detected and the most extensively observed so far . Nevertheless , unresolved issues are still open in the literature on the physics of the afterglow and on the GRB environment . In particular , GRB 070125 was claimed to have exploded in a galactic halo environment , based on the uniqueness of the optical spectrum and the non-detection of an underlying host galaxy . In this work we collect all publicly available data and address these issues by modelling the NIR-to-X-ray spectral energy distribution ( SED ) and studying the high signal-to-noise VLT/FORS afterglow spectrum in comparison with a larger sample of GRB absorbers . The SED reveals a synchrotron cooling break in the UV , low equivalent hydrogen column density and little reddening caused by a LMC- or SMC-type extinction curve . From the weak Mg ii absorption at z = 1.5477 in the spectrum , we derived \log N ( Mg ii ) = 12.96 ^ { +0.13 } _ { -0.18 } and upper limits on the ionic column density of several metals . These suggest that the GRB absorber is most likely a Lyman limit system with a 0.03 Z _ { \odot } < Z < 1.3 Z _ { \odot } metallicity . The comparison with other GRB absorbers places GRB 070125 at the low end of the absorption line equivalent width distribution , confirming that weak spectral features and spectral-line poor absorbers are not so uncommon in afterglow spectra . Moreover , we show that the effect of photo-ionization on the gas surrounding the GRB , combined with a low N ( H i ) along a short segment of the line of sight within the host galaxy , can explain the lack of spectral features in GRB 070125 . Finally , the non-detection of an underlying galaxy is consistent with a faint GRB host galaxy , well within the GRB host brightness distribution . Thus , the possibility that GRB 070125 is simply located in the outskirts of a gas-rich , massive star-forming region inside its small and faint host galaxy seems more likely than a gas-poor , halo environment origin .