Unlocking Nigeria’s Oil and Gas Potentials: How Hydrocarbon Tax Policies Influence Multinational Investment Decisions

Abstract

This study investigates the influence of Nigerian hydrocarbon tax regimes on investment decisions made by multinational corporations (MNCs) operating in the Nigerian oil and gas sector. The research aims to assess the impact of taxes, including the Petroleum Profits Tax (PPT), royalties and the hydrocarbon tax burden introduced by the Petroleum Industry Act (PIA) of 2021, on the investment decisions of MNCs. Through a quantitative analysis, this research examines how the hydrocarbon tax burden shapes the investment strategies of oil companies such as Shell, ExxonMobil, Total Energies, and Eni, taking into account external factors such as global oil prices and fiscal policy risks. The study also investigates the correlation between the hydrocarbon tax burden and investment trends in the oil and gas industry. The findings highlights a complex relationship between tax regimes and investment behavior, providing insights for policymakers and industry stakeholders. The study concludes with policy recommendations for optimizing Nigeria’s fiscal tax regime to balance government revenue generation with attracting foreign investments in the oil and gas sector.