FG grants Shell $11.5/barrel tax credit to unlock $20bn investment

Nigeria's Federal Government has approved a significant production-linked tax credit for Shell Plc's Bonga Southwest Aparo deepwater oil project, a move designed to unlock an estimated $20 billion in investment and accelerate the nation's crude oil output. President Bola Tinubu sanctioned fiscal terms that grant Shell and its partners a rebate of $11.50 for every barrel of crude oil produced from the project.

This incentive is more than double the standard incentive currently available under Nigeria's fiscal framework. Sources familiar with the matter indicated that this enhanced rebate is expected to propel the long-delayed Bonga Southwest Aparo project towards a Final Investment Decision. The tax credit is also slated to be extended to other international oil companies developing new deepwater projects in Nigeria, remaining in effect until at least 2029.

The decision marks a critical step in the Federal Government's strategy to revive investor confidence in Nigeria's oil and gas sector. The industry has faced years of declining investment due to challenges such as oil theft, pipeline vandalism, insecurity, aging infrastructure, and regulatory uncertainty.

The Bonga Southwest Aparo project is recognized as one of Nigeria's largest undeveloped deepwater oil fields. Upon commencement, it is projected to produce approximately 150,000 barrels of crude oil per day, significantly contributing to Nigeria's overall oil production capacity. A spokesperson for Shell confirmed the company is continuing work toward developing the project, promising official updates through established channels. Officials from the Nigerian National Petroleum Company Limited and the Office of the President’s Special Adviser on Energy did not immediately respond to requests for comment.

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Shell continues to progress the Bonga Southwest Aparo project toward development and will communicate material updates through official channels.