French energy giant TotalEnergies has taken fresh legal action against Nigeria’s tax authorities and the Nigerian National Petroleum Company (NNPC), challenging a petroleum profits tax assessment worth $554 million (about N75.2 billion). The company argues that the tax demand violates the terms of a long-standing agreement signed with NNPC in 2008 for the development of the Ofon Phase II offshore oil project. The case, now before the Lagos Tax Appeal Tribunal, adds another chapter to the growing legal disputes surrounding tax obligations in Nigeria’s oil and gas industry.
According to court documents, TotalEnergies is contesting additional petroleum profits tax assessments issued by the Nigeria Revenue Service (NRS) for the 2019 to 2024 accounting years. The company claims the assessments are inconsistent with the Petroleum Profits Tax Act and were issued despite previous tax demands of approximately $324.5 million covering the same period. TotalEnergies insists the new assessment ignores the financial framework already established under its agreement with NNPC.
At the center of the dispute is the Modified Carry Agreement signed in November 2008, under which TotalEnergies financed NNPC’s share of development costs for the Ofon Phase II project in Oil Mining Lease 102. In exchange, the company was entitled to receive an agreed allocation of crude oil and gas, with proceeds managed through an escrow arrangement established in 2010. TotalEnergies argues that petroleum profits tax payments were already meant to be settled through this escrow mechanism, making the latest tax claims unjustified and contrary to the contractual arrangement.
The company further argues that part of the assessment, particularly for the 2019 accounting year, falls outside the legal time limit allowed under Nigeria’s Petroleum Profits Tax Act. TotalEnergies maintains that the law permits additional tax assessments only within six years of the relevant accounting period. It also claims it overpaid about $239.2 million in petroleum profits tax between 2019 and 2022 and wants those excess payments used to offset its outstanding Company Income Tax liabilities. In addition, the firm is seeking the cancellation of roughly $237.7 million in accumulated interest and penalties attached to disputed tax assessments.
The lawsuit comes as Nigeria continues implementing sweeping tax reforms aimed at increasing government revenue and expanding the country’s tax base. While the federal government has reported a significant rise in tax collections during the first half of 2026, the outcome of this high-profile legal battle could shape future tax administration in the oil and gas sector. Industry observers will be watching closely, as the tribunal’s decision may influence how existing contractual agreements are interpreted alongside Nigeria’s evolving tax policies and investment environment.
source: The africa report
