Section 85 Nigeria Tax Act 2025

Section 85 of the Nigeria Tax Act 2025 is about Non-Associated gas greenfield developments in onshore and shallow water terrains. It provides as follows:

(1) Notwithstanding the provisions of this Act or any other law, the
provisions of this section shall apply to all Non-Associated Gas greenfield developments in onshore and shallow water terrains reaching first commercial
gas production from the commencement of this Act to 1 January, 2029 –

(a) where the hydrocarbon liquids do not exceed 30 barrels per million standard cubic feet, there shall be granted a gas production tax credit at the rate of US$1.00 per thousand cubic feet or 30% of the fiscal gas price, whichever is lower;

(b) where the hydrocarbon liquids exceed 30 barrels per million standard cubic feet but do not exceed 100 barrels per million standard cubic feet, there shall be granted a gas production tax credit at the rate of US$0.50 per thousand cubic feet or 30% of the fiscal gas price, whichever is lower;
(c) where the hydrocarbon liquids exceed 100 barrels per million standard
cubic feet, the incentives under subsections (a) and (b) shall no longer apply;

(d) the gas tax credit granted by this section shall apply on Non-Associated Gas sales for 10 years only, beginning from the date of attaining first gas production; and
(e) at the expiration of the 10 years referred to in subsection (1)(d), gas production allowance shall be granted at the respective rates set out in subsection (1)(a) and (b), provided that gas production tax credit and gas production allowance shall not be granted in respect of gas production of the same period.

(2) In the case of all other Non-Associated Gas Greenfield projects with first commercial gas production after 1 January, 2029, gas production allowance shall be granted at US$0.50 per thousand cubic feet or 30% of the fiscal gas price, whichever is lower, provided that the hydrocarbon liquids do not exceed 100 barrels per million standard cubic feet.

(3) The gas production tax credit that can be recouped in any year shall not exceed the tax payable on the field(s) for that year on that income, subject to the payment of any minimum tax where applicable.

(4) Unrecouped tax credit in one year may be carried forward for a maximum of three years.

(5) The fiscal gas price for calculating gas production tax credit and gas production allowance shall be the same price used for determining royalties.

(6) The provisions of this section shall apply to oil mining leases and petroleum mining leases.

(7) Where first gas production cannot be achieved due to force majeure, such as natural disasters or acts of terrorism, the timelines and obligations stipulated in subsection (1) may be suspended, subject to approval by the Commission, until such time as the force majeure ceases to exist.

(8) The Commission shall certify the applicable hydrocarbon liquid ratios for the purposes of ascertaining appropriate gas production tax credit or gas production tax allowance.

(9) The incentives under this section shall not apply to any company that has claimed Associated Gas Framework Agreement incentives for the same Non-Associated Gas Greenfield project.

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