The upstream fiscal and regulatory outlook of Nigeria underwent a comprehensive reform with the Petroleum Industry Act (PIA) of 2021. Nigeria has implemented different contractual regimes for oil exploration and production, including Production Sharing Agreements (PSAs), Joint Ventures and concessions in the form of Sole Risk agreements, with special conditions for marginal fields. In the latest reform, the Nigerian National Petroleum Corporation (NNPC) is replaced with a limited liability company, NNPC Ltd, and is now enabled for joint venture arrangements, signaling a structural shift within the industry.
The PIA of 2021 aimed to establish a comprehensive framework encompassing regulation, legality, fiscal policies, and governance for the nation's petroleum sector, alongside providing funding for the development of communities. Enacted by President Muhammadu Buhari in August 2021, it represented a significant effort to overhaul Nigeria's petroleum industry, which constitutes over 85% of the country's exports and around 30% of budget revenues. The PIA introduces several alterations to enhance the fiscal attractiveness of oil and gas assets, as detailed in the report.
The fiscal burden varies depending on the regime, with different cost and risk levels associated with each. The timing of taxation being generally front-loaded, and the state participation requirements in PSAs and JVs with the NNPC, significantly increase the discounted state take. PSAs used to offer the most competitive fiscal terms available in Nigeria, but the framework has become less attractive over time, with an increasing state profit share, and lower cost deduction caps, whilst JVs and Sole Risk regimes' fiscal terms were harmonised and improved with the PIA.
“Nigeria Upstream Fiscal and Regulatory Guide”, presents the essential information relating to the terms which govern investment into Nigeria's upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Nigeria’s upstream oil and gas investment climate.
The PIA of 2021 aimed to establish a comprehensive framework encompassing regulation, legality, fiscal policies, and governance for the nation's petroleum sector, alongside providing funding for the development of communities. Enacted by President Muhammadu Buhari in August 2021, it represented a significant effort to overhaul Nigeria's petroleum industry, which constitutes over 85% of the country's exports and around 30% of budget revenues. The PIA introduces several alterations to enhance the fiscal attractiveness of oil and gas assets, as detailed in the report.
The fiscal burden varies depending on the regime, with different cost and risk levels associated with each. The timing of taxation being generally front-loaded, and the state participation requirements in PSAs and JVs with the NNPC, significantly increase the discounted state take. PSAs used to offer the most competitive fiscal terms available in Nigeria, but the framework has become less attractive over time, with an increasing state profit share, and lower cost deduction caps, whilst JVs and Sole Risk regimes' fiscal terms were harmonised and improved with the PIA.
“Nigeria Upstream Fiscal and Regulatory Guide”, presents the essential information relating to the terms which govern investment into Nigeria's upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state’s take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Nigeria’s upstream oil and gas investment climate.
Scope
- Overview of current fiscal terms governing upstream oil and gas operations in Nigeria
- Assessment of the current fiscal regime’s state take and attractiveness to investors
- Charts illustrating the regime structure, and legal and institutional frameworks
- Detail on legal framework and governing bodies administering the industry
- Levels of upfront payments and taxation applicable to oil and gas production
- Information on application of fiscal and regulatory terms to specific licenses
- Outlook on future of fiscal and regulatory terms in Nigeria
Reasons to Buy
- Gain insights into the regulatory landscape: Get a comprehensive overview of the fiscal and regulatory environment.
- Understand the impact on business operations: Learn how the regulatory burden affects the cost of doing business.
- Assess risks and challenges: Identify the potential risks and challenges associated with operating in the country.
Table of Contents
1 Executive Summary
3 Key Fiscal Terms - Production Sharing Agreements
4 Key Fiscal Terms - Joint Venture, Sole Risk and Marginal Fields
5 Regulation and Licensing
6 Appendix
List of Tables
List of Figures
Companies Mentioned (Partial List)
A selection of companies mentioned in this report includes, but is not limited to:
- Nigerian National Petroleum Company Limited (NNPC Ltd)
