FG Launches New Fiscal Incentives to Revamp Oil, Gas Sector, Aims to Attract $10bn Investment

•Targets long-term oil production target of 4 million bpd, 12,000bpd Awoba Field resumes production

Emmanuel Addeh in Abuja

The federal government yesterday officially launched a new set of fiscal incentives to rejuvenate Nigeria’s ailing oil and gas industry, stressing that it aims to attract about N10 billion in investment between the next 12 months to 18 months.

It was learnt that the presidential directives were developed and coordinated by the Special Adviser to the President on Energy, Mrs. Olu Verheijen, to ensure a competitive framework for the Nigerian oil & gas industry.

This coming on the heels of announcement by the Nigerian National Petroleum Company Limited (NNPC Ltd) and its Joint Venture (JV) partner in the Awoba Unit Field, Newcross Exploration and Production Ltd, yesterday of  resumption of production from the Awoba field.

The consolidated guidelines for the fiscal incentives, a statement emanating from the event said, are based on extensive collaboration across the Finance and Petroleum Ministries.

According to the statement, it involved several key regulatory bodies, including the Federal Inland Revenue Service (FIRS), the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

Speaking at the event, Verheijen stated that the new measures had been designed to deliver a competitive Internal Rate of Return (IRR) for oil & gas projects and attract over $10 billion in new investments within the next 12-18 months.

She explained that they also underscore Nigeria’s commitment to reaching its long term oil production target of 4 million barrels per day, while enhancing the reliability of gas supply to boost export earnings and fuel Nigeria’s industrialisation.

Verheijen disclosed that among the guidelines signed were the NUPRC Guideline on Hydrocarbon Liquids Content in a Non-Associated Gas (NAG) Field, essential for accurately categorising and quantifying the hydrocarbons liquid content in the fields.

Additional guidelines, she said, focused on the applicability of tax credits and allowances for Non-Associated Gas Greenfield Development and the Midstream Capital and Gas Utilisation Allowance, providing taxpayers with clarity on the computation of the benefits.

Also speaking, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, who presided over the signing ceremony at the Federal Ministry of Finance headquarters in Abuja, admitted that the sector had stagnated over the last decade.

He endorsed the consolidated guidelines for the implementation of fiscal incentives for the oil & gas sector – a cornerstone of the presidential directive aimed at enhancing the Nigerian oil & gas sector’s global competitiveness while stimulating economic growth.

Edun thanked President Bola Tinubu for signing the directive in February 2024 to engender growth in the Nigerian oil and gas sector, which he said had stagnated for over the last 10 years.

 “The idea is to create an atmosphere conducive to international competitiveness such that investment comes in. And in this case, we know it’s Foreign Direct Investment (FDI),” he stated.

The signing ceremony was attended by various stakeholders, including the Nigerian National Petroleum Company Limited (NNPC), Oil Producers Trade Section (OPTS) and the Independent Petroleum Producers Group (IPPG).

This, it said, further highlighted Nigeria’s unified approach toward reinvigorating its oil and gas sector.

Two Years After, NNPC, JV Partner Restart Oil Production at 12,000bpd Awoba Field

A statement from the Chief Corporate Communications Officer of the national oil company, Olufemi Soneye, said the asset last contributed production to the Bonny Terminal in 2021 and was finally shut down in February 2022 due to evacuation issues and crude oil theft.

According to the NNPC the resumption of activities at the Awoba field is because it is keen on optimising production from the nation’s hydrocarbon assets to boost revenues and meet the nation’s Organisation of Petroleum Exporting Countries (OPEC) production quota.

Since the restart of the Awoba field by NNPC and it partner on April 13, 2024, the oil company revealed that production from the field has averaged 8,000 barrels per day and is expected to plateau to 12,000 per day at full ramp up within 30 days.

 Awoba, it stressed, is also expected to significantly boost gas supply to the power sector and other gas-based industries.

“The Awoba Unit which straddles OMLs 18 and 24 is located in the mangrove swamp south of Port Harcourt, Rivers State. Both OML 18 and OML 24 assets are under the management of the NNPC Upstream Investment Management Services (NUIMS).

“NNPC Ltd has been recording a string of production successes from the JV portfolio which have significantly lifted overall national production.

“Besides the recent start of production at the Madu Field by the NNPC Ltd/First E&P JV, the company has achieved the restart of production at OMLs 29 and OML 18 in late 2023 which have steadily contributed an average of 60,000bpd to the nation’s production output since their restart,” the statement added.

Speaking on the development, the Group Chief Executive Officer,  Mele Kyari, ascribed the achievement to the President Bola Tinubu administration’s success in providing enabling operating environment for businesses to thrive.

He expressed appreciation to all stakeholders, including staff, operators, host communities, government security agencies, and private security contractors, who played a pivotal role in achieving the feat.

On its website, Newcross E&P said the Awoba oil well was the first oil well it drilled  post acquisition of the OML 24 asset from Shell. The well, it said, was drilled with the Shengli 4 rig which was released on October 27, 2018.