Nigeria cuts income tax on gas projects and increases flaring penalty

Jan. 6, 1998 Nigeria is to cut income tax rates for gas projects to 35 % from 85 % according to Finance Minister Anthony Ani.
In his annual budget breakdown Ani said gas projects would from now on be treated under usual company income tax rates instead of paying the higher rate which applies to income from oil production. "For the avoidance of doubt, where there is an integrated oil and gas project, the oil operation which is to be taxable under Petroleum Profit Tax is to be separated from the gas operation,'' Ani said.
Ani further said that the penalty for oil companies flaring gas had been increased to 10 naira ($ 0.13) per thousand cubic feet from 0.5 naira per thousand cubic feet.
Nigeria has been trying to reduce the flaring of gas associated with production of more than 2 million barrels of crude oil per day, which it says is wasteful and environmentally damaging.
All the big multinational firms producing oil in Nigeria are already involved in major projects to use more gas. Among them areShell, Mobil, Chevron and Elf-Aquitaine.
Nigeria has more reserves of gas than oil estimated at over 110 trillion cubic feet but more than 70 % of gas associated with oil production is currently flared.