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Can Nigeria’s new deep offshore incentives unlock capital? 17 Sep 2026

On 6 August 2026, President Bola Tinubu signed the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026. In a subsequent announcement on 11 August, the Presidency described the order as a framework that could unlock up to $50 billion in new investment, with the approximately $10 billion Bonga South West project identified as an early intended beneficiary. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) had separately projected that 22 major offshore projects expected between 2026 and 2030 have an estimated investment potential of between $30 billion and $50 billion. 

Nevertheless, the underlying point is not merely the figures. It is the process that the Order represents. Nigeria’s deep offshore sector is a province of established commercial significance, with reserves capable of attracting investment on a substantial scale. The difficulty over much of the past decade has not been the absence of commercially meaningful acreage. It has been the terms on which capital can be induced to undertake the distinctive risk of deepwater development, including investments measured in billions of dollars, committed years before production, exposure to long development cycles, commodity-price volatility, regulatory uncertainty and the opportunity cost of deploying capital elsewhere. 

The last consideration is increasingly difficult to ignore. Nigeria does not compete for upstream capital in isolation. Its fiscal and regulatory proposition is assessed against an expanding universe of alternatives, including Angola, Ghana, Guyana and Brazil, whose governments have become increasingly sophisticated in presenting petroleum opportunities to international investors. The real test of the Order is not whether Nigeria has created a more generous incentive. It is whether Nigeria has created a fiscal and regulatory proposition that investors and their financiers can actually rely on.

For much of the past decade, Nigeria’s response to that competitive pressure was characterised by negotiation at the project level. Deepwater developments were, in effect, required to establish their own economic equilibrium. The fiscal accommodations necessary to make particular projects investable were tailored field by field and operator by operator, through bilateral engagement between government and investors. 

Against this background, the 2026 Order seeks to move Nigeria from discretion and bespoke accommodation to a published framework. The significance of that shift lies not only in the fiscal incentives the Order provides but also in the proposition that investors should be able to determine, with a reasonable degree of confidence, the economic parameters of a qualifying project before entering negotiations. 

A competitive petroleum regime cannot indefinitely depend on individual projects' ability to navigate uncertainty. It must make the terms of investment sufficiently legible so that capital can assess the opportunity on the basis of clear rules rather than regulatory discretion. The ambition, therefore, is not merely to make individual projects more attractive. It is to make the process by which projects become investable more predictable. That is a more consequential reform, and one that deserves recognition.

The Order’s central tool is a tax credit, i.e., a reduction in the tax owed by qualifying deep offshore projects, calculated per barrel of oil produced. The size of the credit depends on the scale of the project: smaller qualifying developments receive a lower per-barrel credit, while larger ones receive a higher credit. Projects on newly awarded leases can attract a modest additional credit. There is also a built-in calibration. If oil prices fall sharply below $50 per barrel, the credit is halved. 

For projects that require more support than the standard credit provides to be financially viable, the Order creates an additional layer of relief, available on a case-by-case basis for new developments where a final investment decision has not yet been made but is committed to by the end of 2029. The widely reported figures of $11.50 per barrel for oil and $8.00 per barrel for gas represent the combined maximum of both layers. They are a ceiling, not a guarantee.

The Order also addresses a specific problem familiar to investors in Nigeria’s mature deepwater fields. Under existing Production Sharing Contracts, the government’s share of profit oil increases progressively as a field produces more. A company that decides to develop a new project within an area where an older field has already been producing for years would, under the previous rules, inherit the higher government take accumulated by the older field’s production history. That inheritance made new investment in mature areas harder to justify. 

However, the Order allows the profit-sharing arrangement to reset for a qualifying new project, giving it the more favourable starting terms it would have received if it had been developed from scratch. It is, in essence, a recognition that new capital deserves new terms.

The Order derives its validity from two statutory provisions of different character. Section 3(1)(e) of the Petroleum Industry Act (PIA) assigns to the Minister of Petroleum the function of promoting an enabling environment for investment in the petroleum industry. Section 77(1) of the Nigeria Tax Administration Act (NTAA), 2025, by contrast, confers on the President, acting on the recommendation of the Minister of Finance, a specific power to remit tax, wholly or in part, where satisfied that such remission is just and equitable. It is the latter provision that provides the operative statutory basis for the tax-remission component of the Order; the former provides the broader policy context within which the intervention is presented.

That distinction matters. The legal framework conferring fiscal benefit must be rooted in primary legislation, not a mere executive directive. This is directly linked to bankability. Deep offshore developments are capital-intensive, long-dated projects, commonly financed through project finance, in which lenders assess the project’s future cash flows as the principal source of repayment and take security accordingly. In that setting, the legal durability of the assumptions underpinning those cash flows is not a peripheral concern. 

A fiscal benefit must be more than economically attractive; it must be sufficiently certain in its legal operation, sufficiently durable in its application, and sufficiently capable of being enforced to support the financing model on which the project depends. Fiscal incentives attract capital only when investors and their financiers can convert them from statements of policy into dependable components of project economics. The very important question for the Order, therefore, is whether it is sufficiently anchored in the statutory powers under which it is made and whether its terms are sufficiently certain and durable to support investment and financing decisions.

Holistically, the Order appears to be the latest expression of a policy direction that has been taking shape since the PIA was enacted in 2021: a move towards a more rules-based, transparent, and investment-aligned fiscal framework for Nigeria’s petroleum sector. The consistency of that direction over multiple years and across the Tax Reform Acts of 2025 reflects a serious institutional purpose. What remains is the work of implementation. 

A policy framework is only as effective as its administration. Published rules that are applied opaquely, implementation guidelines that arrive late and create ambiguity rather than resolving it, and discretionary assessments that cannot be predicted or relied upon are among the conditions under which a well-designed incentive framework fails to attract the investment it is intended to attract. The government, the NRS, the NUPRC, and the NCDMB all have roles to play in ensuring that the framework operates as its architects intend.

Nigeria has historically asked investors to price uncertainty. The Order is an attempt to make uncertainty less of a feature of the investment proposition. Its real test is whether the state itself can now act consistently with the certainty it asks investors to rely on.

Funmilayo Odude is a Partner at Commercial and Energy Law Practice (CANDELP).