In this blog, we cover some of the Oil and Gas Business Investment Opportunities in Nigeria. We also explained how you can start your business in this sector with some available government incentives. Feel free to contact us for your support
Oil and Gas Business in Nigeria is open to public/ private sector participations to all nationals of the world but with regulations from government body. What this mean is, you can come from any part of the world to invest in Nigerian Oil & Gas sector businesses and make good returns. Aziza Nigeria is your choice for business formation and support in Nigeria.
Read: Oil & Gas Compliance and Support Services
One of the reasons to grab the Oil and Gas Business Investment Opportunities in Nigeria is, Nigeria is one of the countries that has low tax rate with 7.5% Value Added Tax and 30% on company income tax. Nigeria also has various tax incentives intended to encourage investment in key sectors of the economy.
How to Start Oil and Gas Investment
You will start with Oil & Gas company registration/ formation. Make sure you meet the prerequisite requirements at this registration stage. Registration of company or Incorporate of company in Nigeria is solely done by Corporate Affairs Commission (CAC). It takes a minimum of 4 – 14 days to complete. The minimum share capital is one (1) million share capitals for Nigerian citizens. There are some peculiarities.
For foreign citizens or company that want to start Oil and Gas Business in Nigeria, read our post on “how to start business in Nigeria as a foreigner” as there are some peculiarities with foreign ownership that you need to know. Also, feel free to Contact us for specific needs.
Oil and Gas Business Investment Opportunities in Nigeria
We categorized the Oil and Gas Investment Opportunities as follows: – Downstream sector – Midstream sector and – Upstream sector The oil and gas business industry in Nigeria is divided into two major sectors: Upstream and downstream. The downstream sector is the refining of petroleum crude oil and the processing and purifying of raw natural gas, as well as the marketing and distribution of products derived from crude oil and natural gas.
Downstream Sector Investment Opportunities
- Domestic Production and Marketing of Liquefied Natural Gas (LPG).
- Domestic Manufacturing of LPG cylinders, valves and regulators, installation of filling plants, retail distribution and development of simple, flexible and less expensive gas burners to encourage the use of gas instead of wood.
- Establishment of processing plants and industries for the production of:
- refined mineral oil, petroleum jelly and grease
- bituminous based water / damp proof building materials e.g. roofing sheets, floor tiles, tarpaulin, and
- building of asphalt storage, packaging and blending that may export these products.
- Establishment of chemical industries e.g. distillation units for the production of Naphtha and other special boiling point solvents used in food processing.
- Linear Alkyl Benzene, Carbon Black and Polypropylene producing industries.
- Development of Phase II (Phase III to commence later) in Nigeria’s Petrochemical Programme.
- The NLNG Projects.
- Small-scale production of chemicals and solvents e.g. chlorinated methane, Formaldehyde, Acetylene etc. from natural gas.
- Crude oil refining with efficient export facilities. Companies with the technology can undertake turn around maintenance of refineries. There is a tremendous scope for small-scale joint venture manufacturing concerns with foreign technical partners. Such ventures can start warehousing arrangements that will ensure continuity of supply at competitive prices.
- Products Transportation and Marketing Associated with products distribution and marketing is a chain of manufacturing and maintenance businesses e.g. Lubricating Oil reprocessing, LPG bottles and accessories, oil cans reconditioning etc.
Read: Oil & Gas Permits and Licenses Registration
Government Incentives to Downstream Sector Investment
Some of the fiscal incentives in place by the government for investors are as follows:
Gas Production Phase
- Applicable tax rate under the Petroleum Profit Tax (PPT) Act to be at the same rate as company tax currently at 30%.
- Capital Allowance at the rate of 20% per annum in the first four years, 19% in the fifth year and the remaining 1% in the books.
- Investment Tax Credit of the current rate of 5%.
- Royalty at the rate of 7% on shore and 5% offshore.
Read: Nigerian Local Content Participation
Gas Transmission and Distribution.
- Capital allowance as in production phase above.
- Tax rate as in production phase.
- Tax holiday under pioneering status.
LNG Projects.
- Applicable tax rate under PPT is 45%.
- Capital allowance is 33% per year on straight-line basis in the first three years with 1% remaining in the books.
- Investment tax credit of 10%.
- Royalty of 7% on-shore, 5% off-shore tax deductible