Nigeria has granted additional fiscal incentives to support the proposed Bonga South West deepwater oil development project, marking another significant step toward one of Africa’s largest upstream investments. The new tax relief, approved by President Bola Tinubu’s administration, is intended to improve the project’s commercial viability and encourage Shell to move the estimated US$20 billion development toward a final investment decision (FID). The incentives also build on a broader package of upstream reforms designed to reverse years of declining investment in Nigeria’s oil sector. Government officials also aim to secure FID before the end of the president’s first term.
Nigeria’s Bonga Deepwater Complex
Bonga South West oil project is planned as the next major expansion of the Bonga deepwater complex, located approximately 120 kilometers offshore in the Gulf of Guinea. The project will use existing infrastructure, including the Bonga floating production, storage and offloading (FPSO) vessel. This is expected to reduce development costs.
Shell is operator of the Bonga oil and gas field and, following its acquisition of TotalEnergies’ interest in 2025, increased its ownership stake in the Bonga license to 65%.
President Tinubu’s Tax Relief Package
The latest package provides further tax relief beyond the incentives announced in January 2026. This improves the project’s economics as Shell evaluates one of the largest deepwater investments currently under consideration in the world.
Additionally, the measures are designed specifically for new capital expenditure and incremental production. According to officials, it therefore does not simply represent broad tax concessions for the oil industry. They also seek to maximize local content participation while helping Nigeria compete with other offshore investment destinations.
Shell West Africa operations
Bonga South West oil project forms part of Shell’s broader strategy of concentrating capital on high-margin offshore and integrated gas assets. This is while exiting mature onshore operations.
Earlier this year, Shell also completed the sale of its Nigerian onshore subsidiary to Renaissance Africa Energy. This ended decades of direct onshore operations in the Niger Delta. The divestment also allows Shell to focus resources on deepwater developments such as Bonga North and the larger Bonga South West expansion. These are viewed as more resilient, lower-emissions assets with stronger long-term returns.
Bonga North Offshore Oil Development
The Bonga South West project follows the momentum created by Bonga North, for which Shell reached a final investment decision in late 2024. Bonga North is expected to recover more than 300 million barrels of oil equivalent. It will achieve peak production of approximately 110,000 barrels of oil equivalent per day.
It is also expected to tie back to the existing Bonga FPSO to sustain production from the wider field into the next decade. The success of Bonga North has strengthened confidence in the commercial and technical case for further expanding the offshore hub through Bonga South West.
Outlook on the Proposed US$20 Billion Bonga South West Offshore Oil Project
Nigerian authorities view the proposed US$20 billion Bonga South West offshore oil project investment as a cornerstone of efforts to revive upstream spending. This is after years of underinvestment driven by regulatory uncertainty, oil theft and delayed project approvals.
Since 2023, the government has introduced a series of fiscal and regulatory reforms aimed at improving investor confidence. Nigeria also seeks to hasten project approvals and boost crude oil production with the incentives. The latter has struggled to consistently meet OPEC quotas.
Officials have also emphasized that the incentives linked to Bonga South West offshore oil project are performance-based. They are to focus on fresh capital deployment, higher production and increased participation by Nigerian companies throughout the supply chain.
Bonga South West Offshore Oil Project Ahead of 2027 FID
If sanctioned, Bonga South West would rank among the largest energy investments in Africa. It would also reinforce Nigeria’s position as a leading deepwater producer.
Additionally, the development is expected to generate thousands of construction and operational jobs. It is also expected to support domestic engineering and fabrication industries. The Bong South West project will also extend the productive life of the Bonga offshore complex. This will contribute significantly to government revenues over its operating life.
Bonga South West Deepwater Oil Project (Bonga Southwest Aparo): Fact Sheet
Location: Offshore Niger Delta, Gulf of Guinea, approximately 120 km offshore in water depths exceeding 1,000 meters.
Products: Oil and gas
Estimated Project Cost: US$20 billion
Operator: Shell Nigeria Exploration and Production Company (SNEPCo), a subsidiary of Shell plc.
Partners: Shell (65%), ExxonMobil (20%) and Eni (15%) under a Production Sharing Contract (PSC) with Nigerian National Petroleum Company (NNPC) Ltd.
Concessionaire: Nigerian National Petroleum Company (NNPC) Ltd.
Development Concept: Large-scale subsea development tied to a new FPSO expected to have a production capacity of around 150,000 barrels per day.
Expected Oil Production: Up to 150,000 barrels per day.
Expected Gas Production: Around 140 million standard cubic feet per day (MMscf/d).
Estimated Recoverable Resources: More than 800 million barrels of oil equivalent across the development phases.
Current Status (July 2026): Nigeria has approved additional investment-linked tax incentives to improve project economics ahead of expected 2027 Final Investment Decision (FID).
Strategic Importance: Jobs, boost foreign exchange earnings and extend production from the Bonga complex. It is also expected to strengthen Nigeria’s offshore oil sector.
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