President Bola Tinubu has approved a new fiscal framework aimed at unlocking up to $50 billion in deep offshore oil and gas investments, ending years of project-by-project negotiations and providing investors with clearer rules and incentives.
The reform is expected to revive major offshore developments that have remained on hold for years, beginning with the estimated $10 billion Bonga South West project.
According to a statement by presidential spokesman Bayo Onanuga, the new framework followed Tinubu’s engagement with Shell Chief Executive Officer, Wael Sawan, during which the President directed officials to develop measures capable of unlocking the country’s deep offshore investment pipeline.
Rather than negotiating incentives separately for individual projects, the Federal Government has now created a broader framework with defined eligibility requirements and implementation procedures.
The policy takes effect through the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026, which also authorises NNPC Limited to amend eligible Production Sharing Contracts where necessary.
Tinubu: Certainty Attracts Capital
Tinubu said the reform was designed to make Nigeria more competitive in the global race for investment capital.
“The countries that attract long-term investment are not necessarily those with the greatest natural resources. They are the ones that provide the greatest certainty,” he said.
He added that the government was seeking to create an environment where investment would translate into broader economic benefits.
“We are creating the conditions for capital to flow, for Nigerian businesses to grow, for our people to prosper and for our natural resources to deliver lasting national value.”
A review of the new order showed that qualifying deep offshore oil projects could receive production tax credits (PTCs) of up to $11.50 per barrel.
Under the standard incentive, qualifying projects with producible reserves of up to 400 million barrels can receive $3 per barrel or 20 per cent of the fiscal oil price, whichever is lower, up to 150 million barrels of cumulative production.
For projects with reserves above 400 million barrels, the standard credit rises to $4.50 per barrel or 20 per cent of the fiscal oil price, whichever is lower, up to 500 million barrels.
Future leases may receive an additional $1 per barrel standard credit from production commencement until the applicable production threshold is reached.
The incentive is reduced by half in any month when the fiscal oil price falls below $50 per barrel.
A supplementary tax credit, determined by the Nigeria Revenue Service on a case-by-case basis, could push the total incentive to $11.50 per barrel for qualifying crude oil projects and $8 per barrel of oil equivalent for non-associated gas projects.
The reform goes beyond tax credits.
A new “Profit Oil Reset” provision allows qualifying greenfield developments within existing contract areas to restart the profit-oil sharing scale.
Where approved, the contractor and government would begin with a 70:30 profit-oil ratio, even where existing production elsewhere in the same contract area has already moved to a higher government share.
The eligible project would also be ring-fenced for cost recovery and tax purposes.
The provision applies to qualifying greenfield developments for which no Final Investment Decision had been taken when the order commenced, provided FID is reached by December 31, 2029.
For qualifying deep offshore gas projects, the standard incentive is set at $1 per thousand standard cubic feet (mscf) or 30 per cent of the fiscal gas price, whichever is lower, where hydrocarbon liquids content does not exceed 30 barrels per million standard cubic feet.
Where liquids content is above 30 but not more than 100 barrels per million standard cubic feet, the incentive falls to $0.50 per mscf or 30 per cent of the fiscal gas price, whichever is lower.
No incentive applies where the liquids content exceeds 100 barrels per million standard cubic feet.
The order also establishes a profit-gas sharing structure for existing non-associated gas PSCs, with the government’s minimum share rising progressively from 20 per cent for production up to 1 trillion cubic feet to 60 per cent for production above 7 trillion cubic feet.
The government has attached strong local-content requirements to the supplementary incentives and Profit Oil Reset.
As a general rule, project-development activities are expected to be carried out in Nigeria.
Exceptions are allowed for critical-path activities, such as long-lead items that could significantly affect project timelines, or activities that would cost more than 10 per cent more to execute locally.
Even in such cases, companies must comply with a Nigerian Content Plan approved by the Nigerian Content Development and Monitoring Board.
According to Special Adviser to the President on oil and gas, Olu Arowolo-Verheijen, the objective is to ensure that offshore investment creates substantial domestic economic value.
“Projects qualifying under the framework will maximise execution within Nigeria wherever commercially and technically feasible,” she said.
She said the policy would strengthen Nigerian engineering, fabrication, marine logistics, technical services and project management while creating skilled employment and deepening local supply chains.
Companies seeking supplementary incentives will be required to submit a full open-book economic model, including relevant cost, production, price and fiscal assumptions.
The Nigeria Revenue Service is expected to determine complete applications within 45 days, in consultation with the Finance Ministry and other relevant agencies.
However, the tax credits cannot be converted into cash or transferred to another party.
They are also not refundable, assignable or saleable and cannot be used to settle another person’s taxes, levies, royalties, penalties or other liabilities.
The reform brings together the Federal Ministries of Justice, Finance and Petroleum Resources, NRS, NNPC Limited, NUPRC, NCDMB and industry investors in what the Presidency described as a coordinated effort to make Nigeria a more predictable destination for long-term offshore capital.
If successfully implemented, the framework could mark a significant shift in Nigeria’s approach to deep offshore investment from negotiating individual deals to establishing predictable rules capable of attracting capital across an entire generation of projects.
