Nigeria Upstream (Oil and Gas) Fiscal and Regulatory Guide, 2024
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Nigeria Upstream (Oil and Gas) Fiscal and Regulatory Report Overview
The upstream fiscal and regulatory outlook of Nigeria has undergone many changes. Nigeria has implemented different regimes for oil exploration and production such as the Production Sharing Agreement and Joint Venture and Concession Agreements. Moreover, the Petroleum Industry Act (PIA) restructures Nigeria’s institutional framework governing the oil & gas sector. It establishes the Nigerian Upstream Regulatory Commission to regulate technical and commercial aspects of upstream operations and creates a separate body for similar oversight of midstream and downstream activities while maintaining the Minister of Petroleum’s role in formulating and overseeing policy.
The Nigeria upstream (oil and gas) fiscal and regulatory guide presents essential information relating to the terms that 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.
Key Regimes | · Production Sharing Agreement
· Joint Venture and Concession Agreements |
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Nigeria Regime Overview ─ Production Sharing Agreement
The production sharing agreements govern offshore licenses. A total royalty burden of more than 20% is levied on gross production based on the location of the field, the commodity, and the prevailing oil price, and Petroleum Profits Tax is payable at a rate of more than 40% following which costs are recoverable up to a limit of more than 70%. The remaining production is designated as profit oil and is shared between the licensee and the national oil company based on a rate-of-return mechanism.
Regime Flow Chart – Production Sharing Agreement
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Nigeria Regime Overview ─ Joint Venture and Concession Agreements
Although in recent years PSAs and sole risk agreements have become the primary contract type offered, however, joint venture agreements have governed petroleum operations. Joint venture agreements share the same framework as royalty/tax agreements, which are used for sole risk operations and marginal field licenses.
Regime Flow Chart – Concession Agreements
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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 the application of fiscal and regulatory terms to specific licenses.
- Outlook on the 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
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Frequently asked questions
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Which are the different regimes for oil exploration and production implemented by Nigeria?
Nigeria has implemented different regimes for oil exploration and production such as the Production Sharing Agreement and Joint Venture and Concession Agreements.
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What is the Production Sharing Agreement regime implemented by Nigeria?
The production sharing agreements govern offshore licenses. A total royalty burden of more than 20% is levied on gross production based on the location of the field, the commodity, and the prevailing oil price, and Petroleum Profits Tax is payable at a rate of more than 40% following which costs are recoverable up to a limit of more than 70%. The remaining production is designated as profit oil and is shared between the licensee and the national oil company based on a rate-of-return mechanism.
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Which act restructures Nigeria's institutional framework governing the Oil & Gas sector?
The Petroleum Industry Act (PIA) restructures Nigeria’s institutional framework governing the Oil & Gas sector.
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