Federal Government Approves Tax Incentive to Boost Shell’s $20bn Deepwater Oil Project
The Federal Government has introduced a new fiscal incentive aimed at accelerating investment in Nigeria’s oil sector, granting a production-based tax credit to support Shell’s Bonga Southwest Aparo deepwater project.
Under the approved framework, the oil major and its partners will receive a tax rebate tied to each barrel of crude produced, a move designed to improve the project’s financial viability and advance it toward final investment approval.
The initiative is part of broader efforts by the Tinubu administration to revive investor confidence in the petroleum industry, which has faced setbacks in recent years due to operational challenges, regulatory uncertainty and declining capital inflows.
Officials indicate that similar incentives could be extended to other international oil companies undertaking deepwater developments, with the policy expected to remain in place for several years.
The Bonga Southwest Aparo field is regarded as one of Nigeria’s largest untapped offshore assets and is projected to attract significant foreign investment while contributing substantially to national oil output once operational.
Industry stakeholders say enhanced fiscal terms could help unlock high-cost offshore projects and support the country’s production targets, particularly as recent data shows a gradual recovery in crude output levels.
The government is also taking steps to strengthen the legal backing of the incentive framework in order to provide greater certainty for investors and ensure long-term stability in the sector.
