On 6 August 2026, President Bola Ahmed Tinubu signed the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026, introducing a new fiscal framework designed to stimulate investment in Nigeria’s deep offshore oil and gas sector. The approval was publicly announced on 11 August, with the Federal Government projecting that the initiative could unlock up to US$50 billion in new investment.

The announcement comes at an important moment for Nigeria’s petroleum industry. The country has substantial offshore resources, but converting those resources into new investment and production has remained a challenge. High development costs, long project timelines, fiscal uncertainty and competition for global capital have made some deepwater projects difficult to commercialise.

The new framework is therefore an attempt to change the investment equation. For investors, it could open the door to significant opportunities. For Government, it represents a bet that targeted fiscal incentives will generate more investment, production, employment and revenue than would otherwise have been achieved. However, translating the policy into value will require more than attractive tax terms. It will require investors to understand the new rules, assess their project economics carefully and navigate the tax, regulatory and contractual implications of the framework.

That is where professional advisory support becomes critical.

A New Investment Proposition

Deep offshore projects require substantial upfront capital and sophisticated technology. Investors may commit billions of dollars years before the first barrel is produced. Consequently, project economics are highly sensitive to taxation, production costs, oil prices, financing costs and regulatory requirements.

Nigeria is also competing with other petroleum-producing jurisdictions for international capital.

The new framework seeks to make Nigeria more competitive by providing clearer incentives for qualifying deep offshore projects. The policy includes production-linked tax incentives and other measures intended to improve project economics, while providing a more predictable basis for investment decisions. This is particularly important because investors do not assess a tax rate in isolation. They evaluate the entire fiscal and commercial structure of a project.

Questions around production-sharing arrangements, tax credits, royalties, deductible expenditure, capital investment, cost recovery and profit-oil allocation can materially affect project returns.

Understanding how these provisions interact will therefore be essential to determining whether a project is commercially viable.

Bonga South West: The First Major Test

The long-delayed Bonga South West project provides an immediate test of the new regime.

The Government expects the project, estimated at approximately US$10 billion under the current development framework, to benefit from the new incentives. Its successful progression would be significant beyond the project itself. If the incentives help move Bonga South West to Final Investment Decision and eventually production, they could provide a strong signal to other investors that Nigeria’s deepwater investment environment is becoming more competitive.

Other major offshore developments could then follow, potentially bringing billions of dollars of additional capital into the Nigerian economy. But investment decisions of this magnitude cannot be based on headline incentives alone. Investors will need robust financial modelling to determine the effect of the new fiscal terms on project returns, cash flows, government take and investment recovery periods.

The $11.50 Per Barrel Question

One of the most closely watched elements of the new framework is the production tax credit.

The framework provides a standard production tax credit for qualifying deep offshore developments, together with supplementary incentives that can potentially bring the total production tax credit for qualifying oil projects to US$11.50 per barrel, subject to the applicable conditions.

At first glance, such an incentive appears substantial. However, its real value will depend on the circumstances of each project. Production volumes, reserves, development costs, timing, oil prices and the applicable contractual and tax framework will all affect the ultimate economic benefit.

This means companies considering new or previously stalled developments should undertake a detailed assessment rather than assuming that the headline tax incentive automatically translates into an equivalent increase in project profitability. The same applies to existing investors whose projects may now qualify for additional fiscal benefits. 

The Government’s Balancing Act

The policy also raises an important question for Government: how much revenue should Nigeria sacrifice to attract investment?

Tax incentives have an opportunity cost. Every credit or remission potentially reduces revenue that Government could otherwise collect. The justification is strongest where the incentive causes an investment to proceed that would otherwise have remained commercially unattractive. This makes one question critical: would these projects have proceeded without the incentives?

If a project would have proceeded without the incentive, the concession could simply transfer additional value to the investor. But if the incentive unlocks a project that would otherwise remain undeveloped, Nigeria could benefit from additional production, taxes, royalties, employment and foreign exchange earnings.

The policy should therefore be judged not simply by how much investment it attracts, but by how much additional economic value it creates.

Opportunities Beyond the Oil Companies

The potential US$50 billion investment also creates opportunities across the wider Nigerian business ecosystem. Deep offshore developments require engineering, procurement, construction, logistics, marine services, fabrication, technology, financial services and professional advisory support. The Government has indicated that qualifying projects should maximise activities undertaken in Nigeria where technically and commercially feasible.

This provides an opportunity to deepen Nigerian participation in the oil and gas value chain. Local companies will need to understand the commercial and compliance requirements associated with participating in these projects. International investors, meanwhile, will need reliable local advisers who understand Nigeria’s tax, regulatory and business environment. The result could be a significant secondary market for professional services.

The Tax and Compliance Dimension

For investors, the new framework introduces a number of issues requiring careful consideration.

Companies will need to determine whether their projects qualify for the relevant incentives and how the incentives interact with existing Production Sharing Contracts and Nigeria’s broader petroleum tax framework. They will also need to consider the tax treatment of capital expenditure, production income, tax credits, related-party transactions, transfer pricing, withholding taxes, indirect taxes and other compliance obligations.

For international investors, these issues are particularly important because the Nigerian tax implications must often be considered alongside the tax rules of the investor’s home jurisdiction.

The incentive may improve project economics, but only if it is correctly interpreted, properly implemented and effectively integrated into the project’s overall tax strategy.

This is where tax planning, transaction advisory, financial modelling, regulatory compliance and ongoing tax risk management become important components of an investor’s project strategy.

The 2029 Deadline

The framework also introduces urgency for existing deep offshore projects. Eligible developments are expected to reach Final Investment Decision by 31 December 2029 to qualify for the applicable standard incentive. For investors with existing offshore assets, this makes the period ahead particularly important. Companies should not wait until the deadline approaches before determining whether their projects qualify.

A structured review should begin with the project’s contractual position, fiscal terms and investment status, followed by an assessment of eligibility, projected benefits and the actions required to secure the available incentives. For some projects, this could materially influence the timing of investment decisions.

What Investors Should Be Doing Now

The new framework presents a strong case for investors and operators to undertake a Deep Offshore Fiscal and Investment Review. Such a review should answer five fundamental questions:

• Does the project qualify?
• What is the actual financial value of the available incentives?
• How do the incentives interact with the project’s PSC and wider tax obligations?
• What compliance and contractual steps are required to access the benefits?
• How can the project’s overall tax and investment structure be optimised within the law?

For existing projects, the exercise could identify previously stalled developments that may now become commercially viable. For prospective investors, it could provide a clearer basis for evaluating Nigeria against competing investment destinations.

Unlocking Value from Nigeria’s Deep Offshore Opportunity

Nigeria’s US$50 billion deep offshore ambition will ultimately be judged by what happens after the announcement. Will projects reach Final Investment Decision (FID)? Will capital actually be deployed? Will production increase? Will Nigerian companies capture more value? And will Government ultimately collect sufficient additional revenue to justify the incentives?

Those questions cannot be answered by fiscal policy alone. They require effective implementation, accurate financial analysis, sound tax planning, regulatory compliance and continuous monitoring of the commercial and fiscal environment.

For investors, this is therefore both an opportunity and a call to action. The new framework could materially improve the economics of deep offshore projects and revive developments that have remained on the drawing board for years. But capturing the opportunity will require a detailed understanding of the rules and their implications for each investment.

At Stransact, we see the evolving deep offshore framework as a significant opportunity for investors and businesses across Nigeria’s oil and gas value chain. Our multidisciplinary Oil & Gas practice supports clients with tax and fiscal advisory, transaction and investment structuring, regulatory and compliance support, transfer pricing, financial analysis and broader business advisory services designed to help clients navigate Nigeria’s changing petroleum landscape and maximise value from new investment opportunities.

The Government has opened a new chapter in Nigeria’s deep offshore investment story.

The next challenge is ensuring that investors can confidently navigate the framework, and that Nigeria captures the economic value that follows.

The US$50 billion opportunity is significant. Turning it into sustainable investment and value will depend on getting the economics, tax, compliance and execution right.

About the Author

Victor Athe, FCA, is the Tax Partner of Stransact Chartered Accountants, a leading professional services firm in Lagos, Nigeria and a correspondent firm of RSM International. He has over 18 years of experience in corporate, personal and cross-border taxation, having begun his career at KPMG’s Tax, Regulatory and Peoples Services practice. He advises local and multinational companies across FMCG, Oil and Gas, IT, Aviation and Financial Services on VAT, WHT, transfer pricing and tax business strategy.

Professional tax enquiries: [email protected]

Note to editors: This article has been prepared for publication as a professional opinion piece. The author is available for interview.