Nigeria has approved a major tax incentive package for Shell Plc’s long-delayed Bonga Southwest Aparo (BSWA) deepwater oil project, marking one of the government’s most significant efforts to revive investment in the country’s upstream petroleum sector. The incentive, linked to production volumes, is expected to accelerate the project’s long-awaited Final Investment Decision (FID) and could pave the way for similar concessions to other international oil companies operating in Nigeria.
Under the approved fiscal terms, Shell and its partners will receive a production-linked tax credit of $11.50 per barrel of crude produced, more than double the standard incentive currently available. The approval, granted by President Bola Tinubu, removes one of the final obstacles delaying the estimated $20 billion offshore development, which has remained on hold for nearly two decades due to regulatory uncertainty and commercial challenges.
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The Bonga Southwest Aparo project is expected to significantly boost Nigeria’s offshore crude production and attract substantial foreign direct investment into the oil and gas sector. The Nigerian National Petroleum Company (NNPC) has described the approval as the country’s first Final Investment Decision on a deepwater Production Sharing Contract (PSC) asset since 2008.
The decision comes as Nigeria seeks to restore investor confidence following years of underinvestment driven by policy uncertainty, delayed reforms, security concerns and global competition from emerging oil-producing nations such as Guyana, Brazil and Angola. By improving the fiscal framework for deepwater developments, the government aims to position Nigeria as a more competitive destination for large-scale upstream investments.
Industry analysts view the tax relief as a strategic policy shift that balances government revenue objectives with the need to attract capital-intensive offshore projects. Deepwater developments typically require billions of dollars in upfront investment and long development timelines, making stable and competitive fiscal terms a critical factor in investment decisions.
If the Bonga Southwest Aparo project proceeds as anticipated, it is expected to create thousands of jobs, stimulate local content participation, strengthen Nigeria’s crude oil production capacity and generate long-term export revenues.
As global competition for energy investment intensifies, Nigeria’s decision reflects a growing recognition that competitive fiscal policies are essential to unlocking the country’s vast offshore resources.
