FG Approves Enhanced Tax Incentive for Shell’s Bonga Deepwater Oil Project

• Federal Government grants Shell a production-linked tax credit of $11.50 per barrel for the Bonga Southwest Aparo project.

• The incentive is expected to unlock a long-delayed investment estimated at about $20 billion.

• Officials say the project could boost Nigeria’s oil output, attract foreign investment and create thousands of jobs.

The Federal Government has approved an enhanced production-linked tax incentive for Shell Plc to support the long-delayed Bonga Southwest Aparo deepwater oil development, in a move aimed at attracting fresh investment into Nigeria’s petroleum sector.

Under the fiscal package, Shell and its partners will receive a $11.50 tax credit for every barrel of crude produced from the project, a significant increase over the standard incentive available under existing petroleum regulations.

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The approval forms part of investment incentives endorsed by President Bola Tinubu to encourage the project’s long-awaited final investment decision after years of delay.

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Industry officials say the incentive removes one of the major obstacles that had stalled the offshore development for nearly two decades.

The Nigerian National Petroleum Company (NNPC) Limited described the decision as the first major investment breakthrough for a deepwater production-sharing contract in Nigeria since 2008, noting that it could help the country regain momentum in offshore oil production.

The fiscal package also resolves a long-standing dispute dating back to 2021, paving the way for Shell and its partners to proceed with the project located about 120 kilometres off Nigeria’s coastline.

When fully developed, the Bonga Southwest Aparo field is expected to attract an estimated $20 billion in foreign direct investment, produce about 150,000 barrels of crude oil per day, deliver approximately 140 million cubic feet of gas daily, and generate more than 5,000 direct and indirect jobs.

NNPC Group Chief Executive Officer, Bayo Ojulari, described the approval as a major milestone, saying the project had remained dormant for almost two decades before the latest intervention.

The negotiations leading to the approval reportedly involved the NNPC, the Nigeria Revenue Service, the Presidency and Shell’s management.

Analysts believe the enhanced tax incentive could encourage other international oil companies with deepwater assets in Nigeria to seek similar fiscal arrangements, potentially boosting investment across the country’s offshore petroleum industry while raising questions about the balance between government revenue and long-term investment growth.