In order to lower various taxes, overlapping legislation, and exorbitant agency fees that deter Investment and raise operating expenses, the Nigerian Gas Association (NGA) has urged for immediate regulatory and fiscal reforms in the gas industry. NGA President Akachukwu Nwokedi acknowledged the federal government’s accomplishments, especially through the Petroleum Industry Act (PIA) and recent Executive Orders, while stressing the need for additional regulatory simplification in his remarks at the 8th Nigeria International Energy Summit (NIES). Conflicting Legislation and Tariffs based on foreign currencies, he noted, discourage investment in the upstream, midstream, and downstream sectors of the gas industry.
As part of Nigeria’s larger Decade of Investment strategy, Nwokedi emphasised the significance of coordinated investments supported by integrated financial and policy frameworks in order to properly utilise the Decade of Gas project. Long-term openness and regulatory clarity, he contended, will foster an atmosphere that is favourable to Investors and guarantee effective capital use and returns. He also emphasised Nigeria’s potential as the continent’s regional gas centre, which would support both Economic Growth and energy security. He promoted intra-African commerce and regional cooperation to tackle energy Poverty and make the most of Nigeria’s gas potential. He concluded by applauding President Bola Tinubu’s dedication to making gas a key component of Nigeria’s economic plan.
Nig. can emerge as a major force in the global natural gas market.
With large reserves and excellent investment prospects, Nigeria’s Natural Gas industry is a pillar of the country’s energy sector. Nigeria is among the top ten countries in the world with natural gas reserves of over 209.26 trillion cubic feet (Tcf), according to latest estimates. Notably, approximately 106.67 Tcf, or 51% of the country’s total gas reserves, are non-associated gas (NAG), which is found in reservoirs devoid of crude oil. Nigeria has the potential to emerge as a major force in the global natural gas market thanks to its enormous resource base.
Nigeria has been actively working to draw investors into its gas industry in order to take use of these enormous reserves. International energy firms Shell, TotalEnergies, and Eni struck a historic deal with the government in October 2024 to supply gas to the proposed $3.5 billion Brass Fertiliser and Petrochemical Plant in Bayelsa State. Petrochemical and gas-based product exports are expected to bring in at least $1.5 billion a year from this project, underscoring the industry’s promising future.
FG has implemented various tax incentives to promote expansion.
Additionally, in September 2024, Nigeria granted a licence for its first floating Liquefied Natural Gas (LNG) facility, confirming its dedication to developing gas infrastructure. With an annual capacity of 2.8 million tonnes (MTPA), this plant, run by UTM Offshore Limited, is designed to process gas from ExxonMobil’s oil field in the Niger Delta. The project is anticipated to improve domestic gas utilisation and decrease gas flaring, in compliance with international environmental requirements. The Nigerian government has implemented various Tax incentives to promote expansion in the oil and gas industry, acknowledging the crucial role fiscal policies play in luring investment.
More so, gas tax credits for non-associated gas greenfield ventures were made available by the Oil and Gas Companies (Tax Incentives, Exemption, Remission, etc.) Order 2024, which went into effect in March 2024. In particular, for projects with hydrocarbon liquid content of no more than 30 barrels per million standard cubic feet (SCF), these credits are equivalent to $1.00 per thousand cubic feet or 30% of the fiscal petrol price, whichever is lower. By promoting the growth of NAG fields, this program seeks to boost gas output and consumption.
Related Article: Govt licences 10 firms for gas distribution
Furthermore, the government has put into effect the VAT Modification Order 2024, which introduces exemptions on important energy items and infrastructure, such as clean cooking equipment, diesel, feed gas, compressed natural gas (CNG), liquefied Petroleum gas (LPG), electric vehicles and LNG infrastructure. These policies aim to improve energy security, reduce living expenses, and hasten Nigeria’s switch to greener energy sources. These efforts have been praised by stakeholders and industry professionals as crucial milestones in reviving Nigeria’s oil and gas industry. It is anticipated that the implementation of tax incentives will draw in both domestic and foreign investors, creating a more dynamic and competitive environment. Nonetheless, issues including inconsistent regulations have been identified.