Nigeria Published Its Deep Offshore Tax Credit Rates and Kept the Larger Share Discretionary

President Bola Ahmed Tinubu made the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026 at Abuja on August 6, 2026, under section 3(1)(e) of the Petroleum Industry Act, 2021 and section 77(1) of the Nigeria Tax Administration Act, No. 5, 2025. It was published as Statutory Instrument No. 37 in the Federal Republic of Nigeria Official Gazette No. 150, Volume 113, of August 10, 2026, at pages B1081 to B1091. The Presidency described the reform as replacing project-by-project negotiations with transparent eligibility criteria, and named the roughly US$10 billion Bonga South West project as the first development it is meant to carry.

The published rates are real and they are small. Paragraph 2 grants a Standard Production Tax Credit of US$3.00 per barrel or 20% of the fiscal oil price, whichever is lower, up to cumulative production of 150 million barrels where producible reserves do not exceed 400 million barrels of oil equivalent, and US$4.50 per barrel on the same 20% test up to 500 million barrels where reserves exceed that mark. Leases awarded after the effective date get a further US$1.00 per barrel. Where the fiscal oil price for a month falls below US$50 per barrel, the credit for that month halves. Non-associated gas runs at US$1.00 per thousand standard cubic feet or 30% of the fiscal gas price, whichever is lower, up to 5 trillion cubic feet, dropping to US$0.50 where hydrocarbon liquids content sits between 30 and 100 barrels per million standard cubic feet and disappearing above 100.

The number the market has taken from the Order is US$11.50. That is not a rate. Paragraph 6(2)(a) is a ceiling on the aggregate of the Standard credit and a Supplementary Production Tax Credit, and paragraph 19 defines the Supplementary credit as available "on a case-by-case basis." On the best published rate for an existing lease, US$4.50, the discretionary band is US$7.00, or 61% of the ceiling. On a field under 400 million barrels of oil equivalent it is US$8.50, or 74%. The gas ceiling of US$8.00 per barrel of oil equivalent sits above a published rate that, at US$1.00 per mscf, is a fraction of it.

Paragraph 10 sets out how the discretionary band is reached. The applicant files with the Nigeria Revenue Service and attaches a full open-book economic model setting out cost, price, production and fiscal assumptions. The Service has 45 days from a complete application to verify eligibility and to "determine the applicable level of Supplementary PTC, having regard to the economic profile of the proposed project development." That phrase is a marginality test. The weaker the modelled economics, the stronger the case for a larger credit, which gives an applicant a reason to present a project at its thinnest. Paragraph 11 answers that with clawback powers covering false statement, misrepresentation, artificial arrangement and breach of an approval condition, recoverable with penalties and interest under the Nigeria Tax Administration Act, 2025.

Eligibility narrows further than the headline suggests. Under paragraph 8, the Supplementary credit and the Profit Oil Reset reach only greenfield developments on which no final investment decision had been taken as at August 6, 2026, and on which one is taken by December 31, 2029. A lessee who misses that date without a force majeure extension from the Nigerian Upstream Petroleum Regulatory Commission keeps the Standard credit at 50% of the applicable rate. Paragraph 9 conditions access on performing all project activity in Nigeria except long-lead items on the critical path and activities that cost more than 10% more to execute in Nigeria once logistics, shipment and duties are counted, with anything done abroad covered by a Nigerian Content Plan approved by the NCDMB. Paragraph 13 cuts the credits by 10% where unit technical cost exceeds benchmarks the Commission sets. Paragraph 15 makes any surplus non-refundable, non-transferable and non-assignable, carried forward four years and then lapsed.

The Order also reaches backwards. Paragraph 19 defines the effective date as February 28, 2024, and paragraph 17 applies the Standard credit provisions, the calculation rules and the surplus rules from that date, while paragraph 18 starts the Supplementary credit, the Profit Oil Reset, the eligibility conditions and the guidelines obligation from the commencement date of August 6, 2026. A development that reached FID in the intervening 29 months therefore collects the published rate and is shut out of the discretionary one.

The strongest objection is that this is more disclosure than Nigeria has offered before, and that is correct. The prior practice was a negotiated package with nothing published at all. The Order publishes a floor, a ceiling, a 45-day decision clock, an evidentiary standard in the open-book model, and an obligation in paragraph 10(4) on the Service to develop and publish the criteria and methodology it will apply and to adhere to them. Compared with a bilateral negotiation, a bounded and reasoned discretion is an improvement, and the Profit Oil Reset in paragraph 7, which restarts a matured sliding scale at a 70:30 contractor to government split for a ring-fenced new development inside an old contract area, is a specific fix to a specific problem rather than a favour.

The objection does not survive the calendar. Paragraph 10(4) and paragraph 16(1) both give the Service 45 days from August 6, which falls on September 20, 2026. Until that document exists, the majority of the advertised incentive has a ceiling and no rule, and there is no version of the file a promoter can hand an investment committee that says what the project will receive. Two things would change that reading. If the September 20 guidelines set out a formula tight enough that a competent adviser can compute the Supplementary credit from a project's own model, the discretion collapses into arithmetic and the criticism is spent. If they set out factors rather than a formula, the Order has moved the negotiation from the Ministry to the Service and published the ceiling.