The Federal Government has granted Shell Plc and its partners a special production-linked tax credit of $11.50 per barrel for the Bonga Southwest Aparo deepwater oil project, in a bid to unlock around $20 billion in investment and fast-track crude oil production.
According to reports, President Bola Tinubu approved the enhanced incentive, which is more than double the standard tax credit currently available under Nigeria’s fiscal framework. The same terms will be extended to other international oil companies developing new deepwater projects and will remain valid until at least 2029.
The Bonga Southwest Aparo field is one of Nigeria’s largest undeveloped deepwater assets. Once operational, it is expected to produce up to 150,000 barrels of crude oil per day, significantly boosting national output.
Push to Revive Upstream Investment
This latest incentive is part of the Tinubu administration’s broader strategy to restore investor confidence in Nigeria’s oil and gas sector following years of declining investment due to oil theft, pipeline vandalism, insecurity, and regulatory uncertainty.
Shell confirmed it is continuing to advance the project and will provide updates through official channels when appropriate.
The government hopes the move will not only increase crude oil production but also generate substantial foreign direct investment, create jobs, and strengthen government revenues.
Early Signs of Recovery
Nigeria’s crude oil production has already shown improvement, reaching an average of 1.56 million barrels per day in June 2026 the highest monthly level since April 2020. This uptick reflects better security around critical infrastructure and renewed upstream investment.
While the enhanced tax credit is expected to improve the economics of deepwater projects, some investors have called for the incentive to be formally published in the Official Gazette to ensure long-term legal certainty and protection against potential policy changes.
The development signals the Federal Government’s renewed focus on unlocking stalled oil and gas projects as part of efforts to grow the economy, increase exports, and reduce reliance on imports.
