Nigeria Upstream Fiscal and Regulatory Report - New Government Considers Splitting PIB into Multiple Bills


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Nigeria Upstream Fiscal and Regulatory Report - New Government Considers Splitting PIB into Multiple Bills

Summary

Nigeria Upstream Fiscal and Regulatory Report - New Government Considers Splitting PIB into Multiple Bills, presents the essential information relating to the terms which govern investment into Nigerias upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the states take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Nigerias upstream oil and gas investment climate.

Scope

- Overview of current fiscal terms governing upstream oil and gas operations in Nigeria
- Assessment of the current fiscal regimes state take and attractiveness to investors
- Charts illustrating the regime structure, and legal and institutional frameworks
- Detail on legal framework and governing bodies administering the industry
- Levels of upfront payments and taxation applicable to oil and gas production
- Information on application of fiscal and regulatory terms to specific licenses
- Outlook on future of fiscal and regulatory terms in Nigeria

Reasons to buy

- Understand the complex regulations and contractual requirements applicable to Nigerias upstream oil and gas sector
- Evaluate factors determining profit levels in the industry
- Identify potential regulatory issues facing investors in the countrys upstream sector
- Utilize considered insight on future trends to inform decision-making
1 Table of Contents
1 Table of Contents 1
1.1 List of Tables 2
1.2 List of Figures 2
2 Regime Overview 3
3 Fiscal Take Assessment 6
4 Key Fiscal Terms - Joint Venture, Sole Risk and Marginal Fields 7
4.1 Upfront Payments 7
4.1.1 Royalties 7
4.1.2 Rental Fees 7
4.2 Taxation 8
4.2.1 Petroleum Profits Tax 8
4.2.2 Capital Allowances 8
4.2.3 Petroleum Investment Allowance 8
4.2.4 Pioneer Tax Holiday 8
4.2.5 Education Tax 8
4.2.6 NDDC Levy 8
4.2.7 Companies Income Tax 9
4.2.8 Withholding Tax 9
4.3 MoU Regime (JVs Only) 9
4.3.1 Minimum Profit Margin 9
4.3.2 Tax Inversion 10
4.4 Gas Utilization Incentives 10
4.4.1 Gas Flaring 10
4.5 Indirect Taxation 11
4.5.1 Value-Added Tax 11
4.5.2 Import Duties 11
4.5.3 State Participation 11
5 Key Fiscal Terms - Production Sharing Agreements 12
5.1 Upfront Payments 12
5.1.1 Bonuses 12
5.1.2 Royalty 12
5.2 Cost Recovery 13
5.2.1 Cost Recovery Limit 13
5.2.2 Recoverable Costs 13
5.3 Direct Taxation 13
5.3.1 Petroleum Profits Tax 13
5.3.2 Education Tax and NDDC Levy 13
5.4 Profit Sharing 14
5.4.1 2005 Model 14
5.4.2 1993 and 2000 Models - Deepwater and Inland Basin 14
5.4.3 Pre-2005 Contracts - Onshore and Shallow Water 14
6 Regulation and Licensing 15
6.1 Legal Framework 15
6.1.1 Governing Law 15
6.1.2 Contract Type 15
6.1.3 Title to Hydrocarbons 15
6.2 Institutional Framework 16
6.2.1 Licensing Authority 16
6.2.2 Regulatory Agency 16
6.2.3 National Oil Company 16
6.3 Licensing Process 17
6.3.1 Production Sharing Agreements 17
6.3.2 Marginal Fields 18
6.4 License Terms 19
6.4.1 Duration and Relinquishments 19
6.4.2 Obligations 19
6.4.3 Local Content 19
7 Outlook 21
8 Contact Information 22

1.1 List of Tables
Table 1: Summary 3
Table 2: Nigeria, Royalty Rates - JV and Sole Risk (%), Liquids 7
Table 3: Nigeria, Royalty Rates - JV and Sole Risk (%), Gas 7
Table 4: Nigeria, Royalty Rates - Marginal Fields (%) 7
Table 5: Nigeria, Petroleum Investment Allowance Rates (%) - JV and Sole Risk 8
Table 6: Nigeria, Guaranteed Profit Margin, Applicable Between US$15/bbl and $US19/bbl, 2000 MoU 9
Table 7: Nigeria, Guaranteed Profit Margin, Applicable Between US$12.50/bbl and US$23/bbl, 1991 MoU 10
Table 8: Nigeria, Guaranteed Profit Margin, Applicable Between US$12.50/bbl and US$23/bbl, 1986 MoU 10
Table 9: Nigeria, Tax Inversion Operating Cost Thresholds (US$/bbl), 2000 MoU 10
Table 10: Nigeria, Production Sharing Agreements, Minimum Signature Bonus (US$), 2005 Bid Round 12
Table 11: Nigeria, Production Sharing Agreements, Representative Bonus, Post 2005 12
Table 12: Nigeria, Production Sharing Agreements, Royalty Rate (%) 12
Table 13: Nigeria, Production Sharing Agreements, Onshore and Shallow Water Royalty Rates (%), Pre-2005 13
Table 14: Nigeria, Profit Sharing Framework, 2005 Model 14
Table 15: Nigeria, Profit Sharing Framework, Deepwater and Inland Basin, Pre-2005 14
Table 16: Nigeria, Representative Production Sharing Framework, Onshore and Shallow Water, Pre-2005 14
Table 17: Nigeria, PSAs, Bid Parameters, 2005 Bid Round 18
Table 18: Nigeria, PSAs, Minimum Work Program, 2005 Bid Round 19

1.2 List of Figures
Figure 1: Regime Flow Chart - Joint Venture, Sole Risk and Marginal Fields 4
Figure 2: Regime Flow Chart - Production Sharing Agreements 5
Figure 3: Nigeria, Indicative NPV10/boe, IRR and Fiscal Take Comparison - Internal, 2015 6
Figure 4: Nigeria, Indicative NPV10/boe, IRR and Fiscal Take Comparison - Regional, 2015 6
Figure 5: Nigeria, Legal Framework 15
Figure 6: Nigeria, Institutional Framework 16