Nigeria’s oil producers say 270 levies threaten investment revival

Nigeria’s independent oil producers are pressing the government to overhaul a tax and levy system they say has grown so unwieldy it risks undoing three years of hard-won gains in attracting investment back to Africa’s largest crude exporter.

Speaking at the opening of the 25th NOG Energy Week on Tuesday, Adegbite Falade, chairman of the Independent Petroleum Producers Group, said the industry now faces more than 270 separate fees, taxes and levies imposed by multiple government agencies, a burden he called the heaviest of any sector in the country and among the highest anywhere in the world.

“The cumulative burden threatens to outpace fiscal incentives introduced under the Petroleum Industry Act,” Falade told an audience that included executives from international oil companies gathered in the capital.

He said smaller producers and operators running mature, lower-margin fields face a “direct threat” to project viability and, in some cases, risk abandoning assets altogether.

Output has climbed to roughly 1.6 million barrels a day between January and May, up from below 1 million barrels a day just a few years ago, with May production exceeding the country’s OPEC quota for the first time in nearly a year.

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The government has also secured more than $8 billion in upstream final investment decisions since 2023, including Shell’s $5 billion Bonga North project, a $2 billion gas development at the HI field, and TotalEnergies’ Ubeta project.

Regulators approved 28 field development plans worth a combined $18.2 billion last year alone, unlocking 1.4 billion barrels of oil and 5.4 trillion cubic feet of gas, according to figures Falade cited. Nigeria’s share of total upstream investment decisions across Africa has risen to nearly 40% in the past two years, from about 4% a decade earlier, he said.

Yet Falade argued that production and investment volumes tell only part of the story. He said the industry’s true test is whether growth translates into jobs, local refining capacity, gas processing for power and fertiliser production, and a pipeline of Nigerian engineers and technicians, rather than simply barrels produced and cargoes shipped abroad.

“A country that produces crude but cannot refine at scale is exposed,” he said, adding that Nigeria’s hydrocarbon development “must go beyond merely extracting crude oil and gas.”

The IPPG chairman called on the government to shift from what he described as a posture of fee collection to one of investment facilitation, urging a harmonisation of charges across agencies to eliminate duplication and improve transparency.

He also flagged a deepening talent shortage as veteran industry professionals retire or exit following divestments by international majors, describing workforce development as a matter of “business survival” rather than corporate responsibility.

Falade further urged lawmakers to revisit the Petroleum Industry Act, the 2021 law that overhauled Nigeria’s oil and gas fiscal and regulatory framework, saying a comprehensive review five years after its passage would help resolve implementation ambiguities and formally codify presidential directives and executive orders issued since.

On gas, he said Nigeria’s reserves, the tenth-largest in the world, remain underexploited relative to their strategic value, pointing to missed opportunities during the supply disruptions triggered by Russia’s invasion of Ukraine in 2022 and the more recent conflict between the U.S. and Iran, both of which pushed global buyers to seek alternative sources and lifted Brent crude to levels above Nigeria’s budget benchmark.

Capacity constraints and delayed investment decisions meant the country could not fully capitalise on either window, he said, calling for upfront investment in liquefied natural gas and floating LNG capacity, along with expanded domestic gas use for power generation and industry.

This year’s conference theme, “Forging Africa’s Strategic Energy Growth Through Global Collaboration,” reflects an industry trying to position itself for the next global supply shock rather than react to it, Falade said. “The next geopolitical shock is not a question of if, but when,” he said, urging companies and regulators to treat energy infrastructure as “a strategic national shield” rather than simply an economic asset.

Nigeria’s oil and gas sector remains central to government revenue and foreign exchange earnings, even as authorities have pushed to diversify the economy. The NOG Energy Week gathering, now in its 25th year, has become one of the continent’s largest annual meeting points for oil executives, policymakers and investors.