President Muhammadu Buhari has endorsed a Bill into law on Monday which amended legislation on agreements related to offshore oil production.
The Bill changes the 1993 Deep Offshore and Inland Basin Production Sharing Contract to add two new revenue streams. One is a flat 10 per cent royalty on all projects over 200 meters deep and the other is a 7.5 per cent royalty on frontier and inland basins.
While offshore oil projects are among the most challenging for companies to develop, they have helped boost oil output in the last few years from Nigeria.
The measures are designed to add about $1.5 billion to government coffers in just two years but an oil industry group warned they would render billions in planned offshore oil investments unprofitable and cut nearly 30 per cent from potential offshore output.
“This is a landmark moment for Nigeria,” Buhari said in a tweet in which he also thanked lawmakers for cooperating in what he called a long overdue amendment.
The measure passed through the legislature in a few weeks, an unusually quick pace for a country that has had a petroleum industry bill pending for more than a decade.