(Bloomberg) — Nigeria announced sweeping tax incentives to attract as much as $50 billion of investment in deepwater-oil and gas projects and revive capital-intensive projects that have stalled for decades.<\/p>\n
President Bola Tinubu on Aug. 6 signed an executive order granting tax credits of as much as $11.50 per barrel of crude for new deepwater developments, starting with Shell Plc\u2019s Bonga Southwest Aparo project, confirming earlier Bloomberg reporting. It also provides a credit of as much as $8 per barrel of oil equivalent for non-associated gas projects.<\/p>\n
The incentives will remain in place until Dec. 31, 2029, the presidency said in a statement Tuesday.<\/p>\n
Tinubu has made reviving Nigeria\u2019s oil and gas industry a key priority since taking office in May 2023, seeking to reverse years of declining investment and production in a sector hobbled by crude theft, pipeline vandalism and aging infrastructure.<\/p>\n
Demand for new energy sources has grown since the US-Iran war closed the Strait of Hormuz, through which 20% of the world\u2019s oil and liquefied natural gas normally flows.\u00a0<\/p>\n
The executive order reflects Nigeria\u2019s commitment to building an investment environment defined by clear rules, strong institutions and enduring partnerships, Tinubu said.<\/p>\n
A significant part of the order is the so-called profit oil reset. It allows new projects within certain mature fields to start from a more favorable 70:30 contractor-government profit split, \u201cthereby materially improving project economics and investment returns,\u201d said Emmanuel Ifeanyi, senior associate on energy at Andersen in Nigeria.<\/p>\n
\u201cThat said, the ultimate verdict on the order will depend on whether it generates genuinely incremental investment and new production, rather than simply granting additional benefits to projects that would have proceeded regardless,\u201d he said.<\/p>\n
Africa\u2019s largest oil producer\u2019s most significant deepwater projects like Shell\u2019s Bonga Southwest and Exxon Mobil Corp.\u2019s Owowo field, have been stranded for decades as the firms weighed the risks of regulatory uncertainties on such huge commitments. The Bonga Southwest project is expected to attract $20 billion in foreign direct investment and produce 150,000 barrels a day upon completion, Nigeria\u2019s state oil company said in March.<\/p>\n
\u201cThe incentives makes deep-offshore blocks that were not being developed now bankable,\u201d said Julius Rone, chief executive officer of UTM Offshore Ltd., a company that\u2019s nearing the development of a $3 billion floating LNG plant in Nigeria.<\/p>\n
The company remains on course to reach a final investment decision before year end to \u201cseize this opportunity and achieve more with the project,\u201d Rone said.<\/p>\n
\u00a92026 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — Nigeria announced sweeping tax incentives to attract as much as $50 billion of investment in 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