Tinubu’s Sweetened Tax Deal Unlocks $20bn Shell Deepwater Oil Investment

By Emmanuel Olugua, With Agency Reports

President Bola Tinubu’s administration has approved enhanced tax incentives for Shell Plc’s long-delayed Bonga Southwest Aparo deepwater oil project, clearing the way for what is expected to become one of Nigeria’s biggest energy investments in nearly two decades.

Under the new fiscal package, Shell and its partners will receive a production-linked tax credit of $11.50 per barrel of crude oil produced—more than double the standard incentive available under Nigeria’s petroleum fiscal regime.

The incentive, approved by President Tinubu and gazetted in January, is aimed at accelerating a Final Investment Decision (FID) on the multibillion-dollar offshore development, which has remained stalled for almost 20 years.

According to Bloomberg, the enhanced tax credit removes one of the last major obstacles preventing Shell and its partners from committing capital to the project.

The Nigerian National Petroleum Company (NNPC) Limited described the approval as a landmark breakthrough, noting that it represents the first Final Investment Decision on a Nigerian deepwater Production Sharing Contract asset since 2008.

The prolonged delay had left Nigeria trailing competing deepwater producers such as Angola, Brazil, and Guyana in attracting fresh upstream investment.

Bloomberg also reported that the fiscal package resolves a dispute-settlement agreement dating back to 2021, eliminating another key hurdle that had delayed development of the oilfield, located about 120 kilometres offshore.

Once operational, the Bonga Southwest Aparo project is expected to attract about $20 billion in foreign direct investment, produce approximately 150,000 barrels of crude oil per day, deliver around 140 million cubic feet of natural gas daily, and create more than 5,000 direct and indirect jobs.

Sources familiar with the negotiations said the agreement emerged after months of technical discussions involving NNPC, the Nigeria Revenue Service (NRS), Presidential Energy Adviser Olu Verheijen, and Shell Chief Executive Officer Wael Sawan.

The report added that Sawan’s recent visit to the Presidential Villa helped accelerate negotiations that ultimately secured the enhanced fiscal terms.

NNPC Group Chief Executive Officer, Bayo Ojulari, described the approval as the culmination of years of efforts to revive a project that had remained dormant for nearly two decades.

“For nearly two decades, the Bonga Southwest project remained stalled,” Ojulari said, attributing the breakthrough to the Tinubu administration’s reform agenda and sustained engagement by NNPC.

Industry analysts say the incentive could reshape Nigeria’s strategy for attracting deepwater investment.

With the new tax credit substantially exceeding the standard rate provided under the Petroleum Industry Act, other international oil companies—including ExxonMobil, Chevron, and TotalEnergies—may seek similar incentives for their own delayed or prospective offshore projects.

The development highlights the government’s willingness to sacrifice some short-term tax revenue in exchange for unlocking billions of dollars in fresh investment, boosting crude oil production, expanding gas output, and strengthening Nigeria’s long-term position as a leading deepwater producer in Africa.