Nigeria Looks To Jumpstart Natural Gas Sector with Tax Cuts

Nigeria is moving forward with a new policy framework aimed at jumpstarting its natural gas sector, hoping to draw in up to $10 billion in investments. The proposed measures include a series of tax incentives to attract both local and international investors to explore the country's deep-water gas resources.

The framework, which has already been approved by the Federal Executive Council, now awaits approval from the National Assembly. Once passed into law, this policy is expected to fast-track the development of Nigeria's natural gas infrastructure. Not only will this accelerate gas exploration and production, but it will also help the country transition away from relying heavily on fossil fuels for transportation. By doing so, Nigeria aims to boost its energy security and reduce its dependence on imported fuels.

The Nigerian government's strategic push toward natural gas is part of a broader effort to secure long-term energy independence and stabilize the economy. By providing tax breaks and other incentives, the government is positioning the gas sector as a key growth area that can create jobs, attract foreign investment, and reduce the nation's carbon footprint.

With the global shift toward cleaner energy, Nigeria's focus on natural gas development is timely. The success of this policy could significantly alter the nation's energy landscape and place it at the forefront of Africa's growing gas industry. Investors and industry professionals are now watching closely to see how quickly the new laws are implemented and how effectively they drive real change.

Earlier this week, Nigeria was set to approve the proposed $1.3-billion sale of ExxonMobil's shallow water assets to local firm Seplat. The transaction has been stuck at the regulatory approval level for months. While seeing its shallow water assets in Nigeria, it is looking to boost its deepwater investments in the country.

By Julianne Geiger, OilPrice

Nigeria Set to Approve Exxon Sale of Oil, Gas Assets to Seplat

Nigeria is set to approve Exxon Mobil Corp.’s sale of its oil and gas assets to domestic energy supplier Seplat Energy Plc, President Bola Tinubu said.

The “divestment will receive ministerial approval in a matter of days,” Tinubu said in a speech on Tuesday marking Independence Day in the West African nation. The move will “increase oil and gas production, positively impacting our economy,” he said.

Africa’s largest oil producer has consistently failed to meet its OPEC target because of years of underinvestment in its oil industry, a key driver of economic growth and government revenue. The country produced 1.48 million barrels of crude per day in August, compared with an OPEC quota of 1.5 million barrels, according to data compiled by Bloomberg.

Last week, Nigerian Vice President Kashim Shettima said that Exxon is considering investing as much as $10 billion in the country’s offshore oil industry in coming years. Seplat has previously said that acquiring Exxon’s assets would almost quadruple the company’s oil output to more than 130,000 barrels per day.

Approving the sale of assets to Seplat will end a more than two-year hiatus that stalled the conclusion of the $1.3 billion transaction. Nigeria’s state oil company in June withdrew a legal challenge blocking that had blocked the transaction.

“Our administration is committed to free enterprise, free entry, and free exit in investments, while maintaining the sanctity and efficacy of our regulatory processes,” Tinubu said.

The president said that economic reforms implemented by the government since he took office in May 2023 have attracted more than $30 billion in foreign direct investment to the country. While the policy overhaul has been welcome by foreign investors, it’s spawned a cost-of-living crisis in Africa’s most-populous nation that triggered deadly protests.

Other Highlights From Tinubu’s Speech:

. Since June 2023, the more disciplined approach adopted by the central bank to monetary policy management has ensured stability and predictability in the foreign exchange market.

. Over the past 16 months, Nigeria’s debt-service ratio has been reduced to 68% from 97%, and foreign reserves have grown to $37 billion from $33 billion.

. Progress has been made in eliminating banditry, kidnapping for ransom, and the scourge of all forms of violent extremism in northern Nigeria.

Once passed into law, the Economic Stabilisation Bills approved by the Federal Executive Council will improve Nigeria’s business environment, stimulate investment and reduce the tax burden.

By Ruth Olurounbi, Bloomberg

Exxon plans $10 billion oil investment in Nigeria

Exxon Mobil Corp has proposed a $10 billion investment in offshore oil operations in a new investment push in Nigeria, a presidential spokesperson said on Thursday, citing company executives.

The investment was announced during talks between Nigeria's Vice President Kashim Shettima and the CEO of Exxon's Nigeria operations Shane Harris on the sidelines of the U.N. General Assembly in New York on Wednesday, presidential spokesperson Stanley Nkwocha said in a statement.

Exxon plans to focus on developing its Owo project, a sizable deep-water project estimated to cost $10 billion.

The producer also plans to spend $2.5 billion annually to boost oil output by 50,000 barrels per day (bpd) over the next few years and maintain its Nigerian operations, despite agreeing to sell its onshore assets to Seplat Energy for $1.3 billion.

Exxon is working closely with the office of Nigeria's president "to secure favourable fiscal arrangements that will make this significant investment possible," Harris was quoted as saying.

An Exxon spokesperson didn't immediately respond to a request for comment.

Production of oil, which accounts for the bulk of Nigerian government revenue and foreign exchange, increased by 10.15% in the second quarter, averaging 1.41 million bpd, up from 1.22 million bpd a year earlier.

But Africa's largest oil producer is still grappling with challenges in its oil industry, including large-scale theft and sabotage, despite passing a law three years ago to ease regulatory uncertainties and attract investments.

"This potential investment by ExxonMobil aligns perfectly with President Bola Tinubu administration's vision for a more investment-friendly Nigeria," Shettima said. "We are committed to creating an enabling environment for such transformative projects." 

By Felix Onuah, Reuters

Video - Billionaire Dangote on Nigeria's Fuel Subsidy, Oil Prices, Arsenal

Nigerian billionaire Aliko Dangote said that ending Nigeria's gasoline subsidy is a “sensitive issue” in the nation that is used to cheap fuel. He also says it seems that the "time has passed" for him to buy the Arsenal soccer club. He speaks with Bloomberg's Francine Lacqua in New York.

Bloomberg

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Video - Nigeria, Equatorial Guinea sign gas pipeline agreement

Under the terms of the deal, the pipeline will transport gas from Nigeria to Equatorial Guinea, where it will be processed at the country's facilities before being sold to power companies and industrial users in the region. President Nguema Mbasogo said the gas pipeline deal is vital for Africa's development.

CGTN