Abstract
Nigeria's vast natural gas resources of over 600tcf are largely undeveloped and spread across the Niger Delta, Dahomey, Anambra and Benue basins. The Niger Delta basin is more developed but has been largely constrained by ‘oil-centric’ fiscal policies, ambiguous regulatory direction, and the preponderance of small (low reserves) and stranded (distant from infrastructure) fields. The gas (LNG) export business has flourished in Nigeria because it has benefitted from fiscal and legal incentives exogenous to the existing legal framework until the Petroleum Industry Act.
With the enactment of the Petroleum Industry Act in 2021, the legal, fiscal and regulatory landscape of the industry changed. An omnibus legislation, it encompasses new ‘gas-centric’ policies, introduces targeted incentives, provides improved regulatory clarity and commercial steer particularly for the gas industry. The act created a distinct regulator for the gas industry, revised the incentives in the Associated/Non-Associated Gas Framework, detailed domestic pricing methodologies, reinforced government commitment to domestic supply obligation amongst others.
In this paper, we analysed the Petroleum Industry Act, detailed the key drivers for gas business and assessed the impact on the viability of small and stranded gas fields. We highlighted the impact of the new fiscal terms on gas projects compared to the erstwhile terms and identified opportunities for government and investors to maximise value and meet gas production targets.
