Oil producers warn 270 levies threaten investment revival
Nigeria’s independent oil producers are warning that 270 different levies imposed by multiple agencies threaten to undermine the recent revival in upstream investment.
Nigeria’s independent oil producers are urging the government to reform a tax and levy system that has become excessively bloated, warning that it threatens to undermine the hard-won gains made in attracting investment back to Africa’s largest crude exporter over the past three years.
Speaking at the opening of the 25th NOG Energy Week, Chairman of the Independent Petroleum Producers Group (IPPG), Abdulrazaq Falade, said the industry currently faces 270 different charges, taxes and levies imposed by multiple government agencies. He described this as the heaviest burden of any sector in the country and one of the highest in the world.
“The cumulative burden risks outweighing the fiscal incentives introduced under the Petroleum Industry Act,” Falade told an audience that included international oil company executives. He said smaller producers and operators running mature, lower-margin fields face a “direct threat” to project viability and, in some cases, may be forced to abandon assets entirely.
From January to May, Nigeria’s oil production climbed to about 1.6 million barrels per day, up from less than 1 million barrels a few years ago. May’s output exceeded the country’s OPEC quota for the first time in nearly a year. Since 2023, the government has secured more than $8 billion in upstream final investment decisions, 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, expected to unlock 1.4 billion barrels of oil and 5.4 trillion cubic feet of gas. Nigeria’s share of upstream investment decisions in Africa has risen from about four percent a decade ago to nearly 40 percent over the past two years.
However, Falade argued that production and investment figures only tell part of the story. The true measure of the industry’s value, he said, lies in whether growth translates into jobs, local refining capacity, gas processing for power generation and fertiliser production, and the training of Nigerian engineers. “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”.
Falade called on the government to shift from 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 professionals retire or exit following divestments by international majors, describing workforce development as a matter of “business survival” rather than corporate responsibility.
He further urged lawmakers to revisit the Petroleum Industry Act, saying that a comprehensive review five years after its passage would help resolve implementation ambiguities and formalise presidential directives and executive orders issued since then. On gas, he said Nigeria’s reserves, the world's tenth-largest, remain underexploited relative to their strategic value, citing missed opportunities during the supply disruptions triggered by Russia’s invasion of Ukraine in 2022 and the more recent US-Iran conflict.
This mirrors the 2014 oil price crash era, when Nigeria’s high-cost operating environment forced many producers to shut in wells. The mechanism was different then, but the result was the same: investment fled, production fell, and the country lost billions in potential revenue.
The winners: the government agencies that collect the levies. The losers: Nigeria’s oil and gas industry, which faces a competitiveness crisis, and the Nigerian economy, which loses investment to more competitive jurisdictions.
Bottom Line: 270 levies. One industry. The math does not work. Nigeria is taxing itself out of the oil business.