Insights, Oil and Gas

Revitalizing Investments in the Nigerian Oil and Gas Industry: The Presidential Order and Directives

On the 28th of February 2024, the President of the Federal Republic of Nigeria signed a Presidential Order and 2 Directives (the “Presidential Directives”) aimed at reattracting investments into the Nigerian Oil and Gas Industry which has been on the decline in recent years. These Presidential Directives aim to tackle the issue of low investments, by:

  1. Providing fiscal incentives to stimulate investments,
  2. Aligning local content requirements with investment demands, and
  3. Streamlining approval timelines in contracting processes.

This article highlights key provisions of the Presidential Directives.

  1. The Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order, 2024

This Order introduces fiscal incentives primarily aimed at enhancing investments in both upstream and midstream gas development in Nigeria through tax credits and investment allowance.

  1. Tax Credit for Non-Associated Gas (NAG) Greenfield Development Projects:

Depending on the date of first gas production, the relevant tax credit for each NAG greenfield project (‘’Project”) varies.

For onshore and shallow water Projects with first gas production before or on the 1st of January 2029, the tax credit is applicable as follows:

  1. Where the Hydrocarbon Liquids (HCL) content, does not exceed 30 barrels per million Standard Cubic Feet (SCF), the gas tax credit will be calculated as the lower value between either the rate of US$1.00 per thousand cubic feet or 30% of the fiscal gas price;
  2. Where the HCL content exceeds 30 barrels per million SCF but does not exceed 100 barrels per million SCF the gas tax credit will be calculated as the lower value between either the rate of US$0.50 per thousand cubic feet or 30% of the fiscal gas price.

Any other Project whose date of first commercial production is after the 1st of January, 2029 shall be entitled to gas tax allowance at a rate of US$0.50 per thousand SCF or 30% of the fiscal gas price, whichever is lower, provided that the HCL content does not exceed 100 barrels per million SCF.

Notwithstanding the applicable rate or date of first commercial production:

  1. the relevant gas tax credit each company is entitled to in each year shall not exceed its Companies Income Tax (CIT) payable for that year and shall not be combined with the Associated Gas Framework Agreement (AGFA) incentives for the same greenfield NAG project.

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Aderemi Ogunbanjo

Partner

Oluwaseun Fapohunda

Senior Associate

Sandra Osinachi-Nwandem

Associate

Eyitayo Ajisafe

Associate

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