What is it about?

This study examines how Nigeria's 2021 Petroleum Industry Act (PIA) changed the fiscal attractiveness of upstream petroleum investments by comparing the pre-PIA and post-PIA fiscal regimes across onshore, shallow-water, and deepwater developments. Using scenario-based fiscal modelling and discounted cash-flow analysis, the study evaluates government take, contractor take, internal rate of return, net present value, profitability, payback period, and the distribution and timing of fiscal burdens.

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Why is it important?

Petroleum fiscal systems must balance government revenue objectives with incentives for companies to invest in capital-intensive and high-risk oil and gas projects. The study shows how the PIA changes this balance. At an oil price of US$60/bbl, government take falls from 95.3% to 87.4% for onshore projects, from 94.6% to 86.8% for shallow-water projects, and from 83.2% to 73.3% for deepwater projects. At the same time, contractor IRR and NPV improve across all three asset classes.

Perspectives

The findings suggest that petroleum fiscal reform should be viewed beyond the simple question of government revenue versus investor returns. The PIA reduces front-end fiscal pressure and improves project economics while maintaining substantial government participation. However, fiscal incentives alone cannot guarantee sustained investment, as production performance, capital expenditure, regulatory implementation, project approvals, and operational efficiency remain important determinants of project outcomes. Future research should incorporate project-level heterogeneity, alternative financing structures, and stochastic oil-price dynamics to provide a more comprehensive assessment of fiscal competitiveness.

Kaseem Abidemi Obakhume
University of Ibadan

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This page is a summary of: Shifting the Balance: Fiscal Attractiveness of Nigeria's Petroleum Regimes Before and After the Petroleum Industry Act, August 2026, Society of Petroleum Engineers (SPE),
DOI: 10.2118/234854-ms.
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