Nigeria’s oil and gas sector expanded in 2024, ranking among the top three global investment destinations out of 14 countries. Non-associated gas project profitability improved by 30%, bolstered by five transformative policy directives aimed at enhancing the business climate and achieving production targets of four million barrels per day and 12 billion cubic feet per day by 2030.
Notice of Tax Incentives for Deep Offshore Production 2024
The Notice of Tax Incentives for Deep Offshore Production 2024, enacted on October 1 2024, reduces the production tax credit paid by deep offshore projects by 10%. The law aims to stimulate the flow of capital for new and existing gas and oil projects. Global major Shell announced an FID for its Bonga North Deepwater Development in December 2024, following the enactment of the decree. Nigeria is using the law to attract over $30 billion in new investments for deep offshore projects by 2029.
Value Added Tax Modification Order
Nigeria introduced VAT waivers for automated gas oil, electric vehicles, LPG, CNG and clean cooking technologies in September 2024. The policy promotes technology inflow and investment to accelerate gas development and market growth. Global major TotalEnergies and the Nigerian National Petroleum Corporation launched the $550 million Ubeta Gas Project in mid-September, having approved the final investment decision (FID) in June 2024, following the introduction of the law.
Presidential Directive 41 Local Content Compliance 2024
On 28 February 2024, Nigerian President Tinubu signed the Presidential Directive 41 Local Content Compliance 2024 to improve foreign participation within the oil and gas industry. The law allows foreign entities to bring in external expertise not readily available within the domestic market to expedite projects development. The law also reduces operational costs for international firms by enabling equipment procurement from outside Nigeria.
Presidential Directive 42 Petroleum Sector Cost Reforms 2024
The Presidential Directive 42 Petroleum Sector Cost Reforms, signed on 28 February,2024, aims to cut contracting costs and reduce project execution timelines, aligning Nigeria’s contracting cycle with global industry standards. Nigeria’s contracting cycle exceeded global industry standard by 4 to 6 times prior to the enactment of the decree.
Presidential Directive 40 Tax Incentives Order 2024
The Presidential Directive 40 Tax Incentives Order was enacted on 28 February 2024, providing tax credits for greenfield gas projects targeting production by January 1, 2029. The policy also provides a 24% investment allowance on midstream sector expenditures for new and ongoing projects.
