Nigerian President Bola Tinubu has approved a new set of targeted incentives for Shell’s proposed Bonga South West deepwater oil project, as Africa’s largest crude producer steps up efforts to revive investment and boost output, the presidency said on Thursday.
The incentives were agreed following a meeting between Tinubu and Shell Chief Executive Wael Sawan, according to a statement from the president’s office. Officials did not disclose the financial terms or regulatory measures involved.
“These incentives are not blanket concessions,” Tinubu said, describing them as “targeted, investment-linked” measures aimed at unlocking new capital and additional production.
Nigeria has introduced a series of regulatory and fiscal reforms since Tinubu took office in May 2023, seeking to reverse years of declining oil output caused by underinvestment, theft, pipeline vandalism and regulatory uncertainty.
Tinubu said the incentives would be ring-fenced and focused on new capital expenditure, incremental production and strong local content delivery. He added that the government expected Shell to reach a final investment decision (FID) on Bonga South West within the current presidential term, which runs until 2027.
“My expectation is clear: Bonga South West must reach a final investment decision within the first term of this administration,” Tinubu said.
Bonga South West is a proposed tie-back development linked to Shell’s Bonga floating production, storage and offloading (FPSO) facility, located about 120 kilometres (75 miles) offshore Nigeria in water depths of around 1,000 metres.
Shell took a final investment decision on the adjacent Bonga North project in 2024 as part of efforts to sustain output at the Bonga FPSO, one of Nigeria’s largest offshore production hubs.
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Since the start of Tinubu’s presidency, Shell has invested around $7 billion in Bonga North and other Nigerian projects, the presidency said, underlining the importance of deepwater developments to the country’s oil sector.
Nigeria’s oil production has struggled to meet its OPEC quota in recent years, often falling below 1.4 million barrels per day, compared with capacity of around 2 million bpd. The government has said attracting investment into offshore fields, which are less exposed to security risks than onshore operations, is critical to reversing the decline.
The president’s special adviser on energy, Olu Arowolo Verheijen, who has been tasked with helping finalise the incentive package, said Shell’s visit reaffirmed the company’s long-term confidence in Nigeria.
In a separate post on LinkedIn, Verheijen said Shell had informed Tinubu of plans to invest an additional $20 billion in the Bonga South West project, though no timeline was provided.
When asked about the comments, a Shell spokesperson said the company continued to invest in Nigeria, with a focus on deepwater and gas projects.
“Our CEO Wael Sawan discussed various projects with President Tinubu, including Bonga South West, that could see us and partners potentially make future investment decisions,” the spokesperson said in an emailed response.
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Shell has increasingly focused on offshore and gas assets in Nigeria after selling most of its onshore oil operations, citing security, environmental and operational challenges. Last year, the company increased its stake in the Bonga oilfield to 65% after acquiring shares from France’s TotalEnergies.
The move underscored Shell’s commitment to offshore Nigeria at a time when several international oil companies have scaled back or exited onshore operations in the Niger Delta.
Analysts say the success of Nigeria’s latest incentive push will depend on the clarity, stability and credibility of the fiscal terms offered, as well as the speed at which approvals are granted.
While recent reforms have been welcomed by investors, industry participants say Nigeria still faces stiff competition from other deepwater provinces, including Guyana and Brazil, where project timelines are shorter and regulatory frameworks more predictable.
For Nigeria, securing fresh investment in projects such as Bonga South West is seen as crucial to stabilising government revenues, which remain heavily dependent on oil exports, and to supporting broader economic reforms aimed at reducing budget deficits and foreign exchange shortages.
