FG approves enhanced tax incentive to unlock $20bn Shell deepwater oil project
The Federal Government has approved an enhanced production-linked tax credit of $11.50 per barrel for Shell Plc’s Bonga Southwest Aparo deepwater oil project, a move expected to unlock billions of dollars in fresh investment into Nigeria’s oil and gas sector.
President Bola Tinubu first approved the gazetting of investment-linked incentives for the project on January 22, 2026, as part of efforts to revive the long-delayed development. The enhanced tax credit, which is more than double the standard production incentive under Nigeria’s petroleum industry framework, is expected to help the project reach its final investment decision after nearly two decades of setbacks.
The Bonga Southwest Aparo project, located about 120 kilometres off Nigeria’s coast, is regarded as one of the country’s largest undeveloped deepwater oil assets. It will also become the first deepwater production-sharing contract project to reach a final investment decision since 2008.
The Nigerian National Petroleum Company (NNPC) Ltd said the project could attract about $20 billion in foreign direct investment, produce approximately 150,000 barrels of crude oil per day, supply about 140 million cubic feet of gas daily, and create more than 5,000 direct and indirect jobs.
NNPC Group Chief Executive Officer, Bayo Ojulari, described the approval as a major breakthrough after years of delays.
“For nearly two decades, the Bonga Southwest project remained stalled,” Ojulari said, crediting the Tinubu administration’s support and the NNPC’s efforts for reviving the investment.
The approval also resolves a dispute settlement agreement dating back to 2021, removing one of the major obstacles that had delayed investment in the offshore field. Negotiations reportedly involved the NNPC, the Nigeria Revenue Service, Presidential Energy Adviser Olu Verheijen and Shell Chief Executive Officer Wael Sawan following engagements between government officials and Shell.
Analysts say the enhanced tax incentive could encourage other international oil companies with deepwater assets in Nigeria to pursue similar investments, although it may reduce government revenue per barrel in the short term while boosting long-term investment and production.
