The Federal Government has introduced a new incentive to attract investment into Nigeria’s deep offshore oil and gas sector.

Under the new policy, qualifying projects will begin with a 70:30 profit-oil split, giving contractors 70 per cent and the government 30 per cent.

The incentive is targeted at new greenfield crude oil and non-associated gas projects that had not reached Final Investment Decision when the policy took effect. The projects must reach FID by December 31, 2029, although extensions may be granted in cases of force majeure.

The arrangement allows new developments within existing oil contract areas to start under the 70:30 structure, even if older production in the same area has already moved to a higher government share.

The government is also offering production tax credits of up to $3 per barrel for qualifying oil projects with reserves of up to 400 million barrels and up to $4.50 per barrel for projects with larger reserves.

For qualifying deep offshore gas projects, tax credits of up to $1 per thousand standard cubic feet will be available, depending on the project’s hydrocarbon liquids content.

Petroleum economist, Professor Wumi Iledare, said the incentives could support investment in capital-intensive offshore developments but cautioned that they must create additional economic value for Nigeria.

The Federal Government expects the measures to help attract up to $50bn in new investment, including the approximately $10bn Bonga Southwest project.

The policy also requires project activities to be carried out in Nigeria, except for approved critical operations or cases where domestic execution would be significantly more expensive.

The Nigeria Revenue Service is expected to issue implementation guidelines within 45 days covering applications, economic assessments, tax-credit calculations, monitoring and other requirements.

The government has also included provisions to recover tax credits obtained through false information, misrepresentation or breaches of the approval conditions.