In its most aggressive move yet to reverse a near two-decade drought in deep-offshore capital commitments, the Federal Government has approved a historic, production-linked fiscal incentive package for Shell Plc’s long-delayed Bonga Southwest Aparo (BSWA) project.
The new framework, signed off by President Bola Ahmed Tinubu, grants Shell and its co-venturers a staggering $11.50 per barrel tax credit for every barrel of crude extracted from the field. This custom arrangement more than doubles the baseline production tax incentives standardly available under the Petroleum Industry Act (PIA).
To prevent this from being a one-off corporate concession, presidential energy adviser Olu Verheijen and the Nigeria Revenue Service (NRS) confirmed that the identical $11.50 pricing buffer will be extended to all international oil companies (IOCs)—including ExxonMobil, Chevron, and TotalEnergies—deploying infrastructure across new deepwater acreage through at least 2029.
Unclogging the $20 Billion Upstream Pipeline
The structural breakthrough arrives after months of dense commercial negotiations between Shell CEO Wael Sawan, the presidency, and the Nigerian National Petroleum Company Limited (NNPC) acting as concessionaire.
The Bonga Southwest block—located roughly 120 kilometers off the Niger Delta coastline—has sat in regulatory stasis since 2008 due to continuous legal disputes over execution terms and deepwater pricing splits.
By pairing this enhanced production tax credit with the comprehensive resolution of a thorny 2021 Dispute Settlement Agreement, the state has cleared the final non-technical hurdles blocking a formal Final Investment Decision (FID). Once online, the field’s projected 150,000 bpd capacity will immediately absorb the country’s excess export capacity, cementing Nigeria’s lead over regional competitors.
Addressing the Policy Somersault Moat
While global oil majors welcome the sudden reduction in marginal operating costs, investing billions in multi-decade offshore infrastructures requires deep legal stability. Because executive orders can theoretically be unwound by future administrations or challenged by judicial reviews, Shell aggressively requested that the federal government codify the new terms.
In response, the presidency has initiated internal procedures to formally publish the tax-credit order in the official government gazette. Gazetting the framework elevates the incentive package from a vulnerable presidential directive into a binding, statutory regulatory law, shielding foreign capital from arbitrary policy shifts.
Ultimately, this targeted tax relief represents a conscious financial trade-off by Abuja. While the state will collect fewer immediate tax receipts per offshore barrel, the macro calculation relies on the belief that generating massive, volume-driven investments is vastly superior to capturing high tax percentages from projects that remain frozen on the drafting board.
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