Introduction
On 6 August 2026, the President of the Federal Republic of Nigeria signed the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026 (the “2026 Order”). The 2026 Order establishes a framework of tax remission incentives intended to encourage investment in qualifying deep offshore oil and gas developments and enhance the commercial viability of projects that have yet to reach Final Investment Decision (“FID”).
The 2026 Order introduces three principal incentives: the Standard Production Tax Credit (“Standard PTC”), the Supplementary Production Tax Credit (“Supplementary PTC”) and the Profit Oil Reset. While the Standard PTC retains the core production tax credit structure introduced under the Notice of Tax Incentives on Deep Offshore Oil and Gas Production, 2024 (the “2024 Notice”), the Supplementary PTC and Profit Oil Reset represent additional incentives under the 2026 framework.
Scope and Applicability
The Standard PTC applies to project developments within existing deep offshore leases where the lessee takes FID between the Effective Date (being 28 February 2024) and 31 December 2029. It also applies to future leases awarded after the Effective Date, including leases derived from existing or future licences. The Standard PTC is determined separately for each approved project development. Where an existing lease does not meet the applicable FID requirement and no force majeure extension is granted, the Standard PTC is reduced to 50% of the applicable rate, provided the project otherwise satisfies the eligibility conditions under the 2026 Order.
The Supplementary PTC and Profit Oil Reset are subject to narrower eligibility requirements. The project must relate to a crude oil or non-associated gas development within a deep offshore lease and must be a greenfield project in respect of which FID had not been taken as at the Commencement Date (being 6 August 2026) of the 2026 Order. FID must be taken on or before 31 December 2029, subject to an extension where the lessee is unable to meet the deadline due to force majeure. In addition, access to the Profit Oil Reset is subject to the applicable profit oil sliding scale under the relevant PSC having progressed beyond the 70:30 Contractor-Government split…
