Oil and gas taxation in nigeria

The pricing framework is underpinned by the National Domestic Gas Supply and Pricing Regulations , which categorise the gas sector into three demand sectors and prescribe an applicable pricing regime for each sector. With a maximum crude oil production capacity of 2. Editor Theodore L Garrett. On the other hand, the policy and fiscal changes being witnessed in Nigeria are largely driven by the government's dire need for revenue to fund its ever-increasing budget. This act was established to give effect to the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage the Convention , which is applicable to pollution damage caused in the territory and territorial sea of Nigeria, and to any preventative steps taken to minimise pollution damage. The same goes for the claim of a production allowance. Reconciled revenues.

This report sets out the results of the reconciliation of the financial flows from activities in the solid minerals sector in Nigeria for the fiscal year. In terms of rates, the power sector and industries classified as strategic industrial sectors enjoy regulated rates that are sometimes substantially cheaper than the commercial rates paid by the other private companies. Until recently there was controversy as to whether the Minister's consent was required for the indirect transfer via a corporate restructure of petroleum interest; however, a court of first instance decided that these transfers require the Minister's consent. Energy: Oil and Gas International Secretariat. Nigeria's work plan for The Flare Gas Regulations in Section 12 1 expressly prohibit the flaring of natural gas except pursuant to a certificate issued by the Minister.

The primary means by which private investors can participate in the upstream oil and gas sector in Nigeria are as follows: through the procurement of a licence Oil Exploration, Oil Prospecting or Oil Mining Licence from the Minister; through the acquisition of interest in an existing licence or in a company with an existing licence; or through the acquisition of a marginal field during a marginal field bid round. The Minister also has the right to revoke an OML if, in its opinion, the licensee is not conducting operations or fails to comply with the Petroleum Act. Laura Alakija. Other contractual arrangements are based on the contract terms between the parties, and most private sector gas supply contracts are concluded on this basis. Presently, NNPC publishes production, lifting and sales values in aggregates but does not disclose details on off-takers and the beneficial owners operating in commodity trading. Tax and legal framework. Bonuses These are premiums payable to the federal government as part of the monetary considerations for the grant of OPLs and OMLs, and the allocation of marginal fields.

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Nigeria EITI has been effective in strengthening public debate and promoting policy options around signature bonuses, unpaid royalties, crude oil and refined products theft. The exemptions relate to new development to eliminate gas flaring and new gas field development from deep formations. Such deductions include: rents incurred by the company in respect of land or buildings occupied under an OPL or an OML; royalties payable by the company on the chargeable value of natural gas, crude oil and casing-head petroleum spirit produced in Nigeria; interest payable on amounts borrowed where such sums borrowed are used in the carrying on of petroleum operations; and expenses incurred in the repair of premises, plant, machinery or fixtures for the carrying on of petroleum operations. The NNPC is, however, responsible for setting the price for federal government crude. Section 2 of the EIA Act sets out the legal framework for the procedure and methods of carrying out an environmental impact assessment EIA , which should be taken into consideration before the implementation of certain public or private projects. Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.
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Sign Up for our free News Alerts - All the latest articles on your chosen topics condensed into a free bi-weekly email. Furthermore, all applicants must be duly incorporated in Nigeria and meet the requirements of the Local Content Act see 2. Subject to the restrictions mentioned, parties to any exploration and production arrangements are entitled to lift their portion of production provided that they meet all their tax and royalty obligations. However, over the life of the field, on the assumption that profit will continue to rise with reduction in capital expenditure outlay, the reduction in the tax rate may only be beneficial in the long run. Another way to acquire interest in upstream assets is for an investor to bid for the acquisition of an interest in a marginal field during marginal field bid rounds conducted by the federal government of Nigeria FGN. To obtain an ATC, the applicant must submit to the DPR the detailed engineering design of the refinery, which must satisfy the provisions of Section 2.
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It is granted for one year and is renewable upon satisfaction of certain conditions. PPT payments are made either in cash or in-kind depending on the operating contract of the company. In the mining sector, the Mining Cadastre Office is responsible for granting licences and for maintaining a records of all license applications. Section 18 of the Oil Pipelines Act provides that any person, other than the owner of a pipeline, who seeks to have access to the pipeline may apply to the Minister. Objectives of beneficial ownership transparency in Nigeria Anti-corruption agenda and the ongoing oil sector reforms. The regulations will transform the current gas pricing framework by introducing new sector-based gas pricing mechanisms and the export parity price as a Nigerian reference marker price for the domestic gas market, and introduce a new domestic gas aggregator, amongst other changes.
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However, a Petroleum Host Community Bill is pending before the National Assembly that seeks to establish a pool of funds for the development of petroleum host communities, which will be utilised for the infrastructure and socio-economic development of the communities, amongst other matters. This lacuna may give rise to subjective interpretations by various stakeholders, and may lead to chaos in its implementation. The Nigerian oil and gas sector is undergoing a lot of development across subsectors that present investment opportunities. The bedrock of the legislation is the Constitution of the Federal Republic of Nigeria, which vests ownership of mineral resources, including oil and gas, exclusively in the federal government 5 and further confers on the federal government exclusive powers to make laws and regulations for the governance of the industry. Country statuses explained. The regulations will transform the current gas pricing framework by introducing new sector-based gas pricing mechanisms and the export parity price as a Nigerian reference marker price for the domestic gas market, and introduce a new domestic gas aggregator, amongst other changes.
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The case for private sector participation in the sector Even though the country enacted the Nigerian Oil and Gas Industry Content Development Act to increase local participation in the sector in , the sector still relies largely on both direct and indirect foreign human, material and financial resources for global competitiveness. Regulation 8 of the Oil and Gas Pipelines Regulations requires a pipeline licensee to implement emergency plans to ensure prompt action for protecting the environment. Any award arising from such international arbitration is enforceable through the Nigerian courts Section 51 of the Arbitration and Conciliation Act Toggle navigation. Section 17 2 of the Oil Pipelines Act provides the tenure of a pipeline licence at a maximum of 20 years.
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