Nigeria has approved a major tax incentive for Shell Plc’s planned deepwater oil project as President Bola Tinubu’s administration intensifies efforts to revive investment in the country’s struggling petroleum sector.
- Nigeria has approved a significant tax incentive for Shell’s Bonga Southwest Aparo deepwater oil project, offering a $11.50 rebate per barrel produced.
- This incentive, over twice the standard tax credit, aims to accelerate investment decisions and may be extended to other international oil companies.
- The Bonga Southwest Aparo project is expected to attract around $20 billion in foreign investment and produce 150,000 barrels of oil per day.
- The measure is part of broader reforms by President Tinubu to restore confidence and boost Nigeria’s struggling petroleum sector.
Nigeria has approved a major tax incentive for Shell Plc’s planned deepwater oil project as President Bola Tinubu’s administration intensifies efforts to revive investment in the country’s struggling petroleum sector.
According to people familiar with the matter, the federal government has granted Shell a production-linked tax credit for the Bonga Southwest Aparo project, offering a rebate of $11.50 for every barrel of crude produced.
The incentive, approved by President Tinubu, is more than double the standard tax credit available under existing regulations and is expected to be extended to other international oil companies pursuing large-scale investments in Nigeria.
The measure is designed to accelerate a final investment decision on the long-delayed offshore development, one of Nigeria’s most significant deepwater projects.
The Nigerian National Petroleum Company (NNPC) Limited estimates that Bonga Southwest Aparo will attract about $20 billion in foreign direct investment and produce approximately 150,000 barrels of crude oil per day once operational, Bloomberg reported.
Shell has acknowledged that work on the project is progressing but said any major updates would be communicated through its official channels.
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Reviving investor confidence
The latest incentive forms part of a broader package of reforms introduced by Tinubu since assuming office in 2023 to restore investor confidence in Nigeria’s oil industry.
Years of crude theft, pipeline vandalism, ageing infrastructure, regulatory uncertainty and declining investment have significantly reduced production, causing the country to consistently miss its OPEC production targets.
An earlier executive order introduced production-based tax credits but capped them at 20% of a company’s annual tax liability, allowing operators to offset high operating costs while encouraging new investments.
The government’s strategy appears to be yielding early results. Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) shows Nigeria’s crude oil production averaged 1.56 million barrels per day in June, the country’s highest monthly output since April 2020.
The increase signals a gradual recovery in Africa’s largest oil producer as policymakers seek to reverse years of declining output and position Nigeria as a more competitive destination for global energy investment.
