Tinubu Okays Fresh Deep Offshore Framework to Unlock $50bn Investment

• Order grants $3-$4.50/bbl standard tax credit, plus $1/bbl for future leases 

•Incentives available to greenfield projects reaching FID by 2029 

•Tax credits aimed at accelerating investments in oil sector

Deji Elumoye and Emmanuel Addeh in Abuja

President Bola Tinubu has approved a landmark reform that replaces project-by-project negotiations with a transparent investment framework designed to unlock up to $50 billion in deep offshore investment and restart Nigeria’s large, capital-intensive offshore developments that have remained stalled for decades.

According to a statement issued yesterday by presidential spokesperson,  Bayo Onanuga, the reform establishes a transparent, rules-based investment framework capable of supporting the next generation of deep offshore developments, beginning with the approximately $10 billion Bonga South West project, while strengthening Nigeria’s competitiveness for globally mobile investment capital.

The decision, the statement said, builds on Tinubu’s engagement with the Chief Executive Officer of Shell plc, Mr Wael Sawan, during which the President directed the development of the next wave of measures required to unlock Nigeria’s deep offshore investment pipeline.

Rather than pursuing project-specific solutions, the federal government transformed that directive into a comprehensive investment framework applicable across multiple categories of qualifying developments, it said.

Given effect through the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026, the framework replaces project-by-project negotiations with transparent eligibility criteria, clear implementation processes and a durable investment architecture that provides greater certainty for investors while safeguarding long-term national value.

The approval also enables NNPC Limited, as the government’s nominated counterparty under the Production Sharing Contracts (PSCs) to proceed with the necessary amendments to eligible Production Sharing Contracts required to implement the framework.

Tinubu commended the Federal Ministry of Justice, the Federal Ministry of Finance, the Federal Ministry of Petroleum Resources, the Nigeria Revenue Service (NRS), NNPC Limited, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the Nigerian Content Development and Monitoring Board (NCDMB), investing partners and other industry stakeholders whose collaboration, technical expertise and commitment helped shape the framework.

Tinubu said: “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. This reform reflects our determination to build an investment environment defined by clear rules, strong institutions and enduring partnerships.

“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.”

On her part, Special Adviser to the President on oil and gas, Olu Arowolo-Verheijen, said a defining feature of the reform is its emphasis on Nigerian industrial capability.

“Projects qualifying under the framework will maximise execution within Nigeria wherever commercially and technically feasible, strengthening domestic engineering, fabrication, marine logistics, technical services and project management. The objective is not only to increase investment and production, but also to create skilled jobs, deepen local supply chains and position Nigeria as Africa’s regional hub for deep offshore project execution,” she stated.

A THISDAY review showed that the new fiscal incentive regime for deep offshore oil and gas projects, signed on August 6, 2026 and published in the Federal Government Official Gazette on August 10, offer production tax credits of up to $11.50 per barrel for qualifying oil developments.

Under the Order, existing deep offshore leases where a Final Investment Decision (FID) is taken between the effective date and December 31, 2029, as well as future leases, are eligible for the Standard Production Tax Credit (PTC), subject to the conditions prescribed by the government.

The Order states that the Standard PTC is intended to “incentivise investments in the deep offshore developments” and to “exclusively benefit parties to a production sharing contract who are directly providing the funding for developments that lead to production.”

For crude oil projects with producible reserves not exceeding 400 million barrels of crude oil equivalent, the government will provide a production tax credit of $3 per barrel or 20 per cent of the fiscal oil price, whichever is lower, up to cumulative production of 150 million barrels.

In the same vein, for projects with producible reserves exceeding 400 million barrels, the Standard PTC rises to $4.50 per barrel or 20 per cent of the fiscal oil price, whichever is lower, up to cumulative production of 500 million barrels.

The Order further provides an additional $1 per barrel Standard PTC for future leases from commencement of production up to the applicable cumulative production threshold.

However, where the fiscal oil price for a qualifying project falls below $50 per barrel in a particular month, the tax credit incentives for that month will apply at 50 per cent of the applicable rate.

The government also introduced a Supplementary Production Tax Credit which could take the total incentive to as much as $11.50 per barrel of crude oil for qualifying oil projects and $8 per barrel of oil equivalent for non-associated gas projects.

The Order states that the Nigeria Revenue Service will determine and grant the Supplementary PTC “on a case-by-case basis”, taking into account the economic profile of the project.

However, the combined Standard and Supplementary PTC cannot exceed the prescribed ceilings.

For gas projects, the Order provides a Standard PTC of $1 per thousand standard cubic feet (mscf) of gas sold or 30 per cent of the fiscal gas price, whichever is lower, for projects with hydrocarbon liquids content not exceeding 30 barrels per million standard cubic feet.

Where the hydrocarbon liquids content is above 30 barrels but does not exceed 100 barrels per million standard cubic feet, the incentive is reduced to $0.50 per mscf or 30 per cent of the fiscal gas price, whichever is lower.

The incentive will not apply where hydrocarbon liquids content exceeds 100 barrels per million standard cubic feet.

Beyond the tax credits, the government has also altered the profit-oil economics for eligible deep offshore developments through what it calls a ‘Profit Oil Reset’.

Under the provision, where a reset is approved, the applicable profit-oil sliding scale will restart for the approved project, with the contractor and government commencing at a 70:30 profit-oil ratio.

The Order specifically stated that this will apply “notwithstanding that existing production elsewhere in the same contract area has already graduated the profit oil ratios to a higher step in the profit oil sliding scale.”

The provision effectively allows an eligible new development within a mature contract area to be treated separately for profit-oil sharing purposes. The eligible development will also be “ring-fenced for cost recovery and tax purposes.”

However, the Profit Oil Reset is restricted to qualifying projects. The Order stated that it applies where the project is a greenfield development for which an FID had not been taken when the Order commenced and the FID is taken on or before December 31, 2029.

The government has also established a profit-gas sharing formula for existing non-associated gas deep offshore production sharing contracts.

Under the formula, government’s minimum profit-gas allocation will be 20 per cent for production up to 1 trillion cubic feet (TCF), 35 per cent for production above 1 TCF and up to 3 TCF, 45 per cent for production above 3 TCF and up to 5 TCF, and 50 per cent for production above 5 TCF and up to 7 TCF.

For production exceeding 7 TCF, the government’s profit-gas allocation will rise to 60 per cent.

The Order also attached local-content conditions to the supplementary incentives and Profit Oil Reset.

It provided that “all activities relating to the project development shall be performed in Nigeria”, except activities that are on the critical path, such as long-lead items that significantly affect the project timeline, or activities that are more than 10 per cent more expensive to execute in Nigeria.

Even where activities are carried out outside Nigeria under those exceptions, they must comply with a Nigerian Content Plan approved by the NCDMB. Companies seeking the supplementary incentives must submit a “full open-book economic model” containing relevant cost, price, production and fiscal assumptions.

Besides, the Nigeria Revenue Service is required to consider a complete application within 45 days, in consultation with the Federal Ministry of Finance and other relevant institutions, and determine the applicable level of Supplementary PTC.

Importantly, the Order stipulated that the tax credits are not refundable, transferable, assignable, saleable or convertible to cash, and cannot be used to offset another person’s tax, levy, royalty, penalty or other liability.