Manny Ita
President Bola Tinubu has formally approved a series of “investment-linked” incentives specifically designed to unlock Shell’s Bonga South West deepwater oilfield, a project estimated to involve $20 billion in total expenditure. Following a high-level meeting with Shell CEO Wael Sawan, the Presidency confirmed late Thursday that these regulatory concessions are part of a broader strategy to revitalize Nigeria’s crude oil production through targeted fiscal reforms. President Tinubu emphasized that the measures are not “blanket concessions” but are instead “ring-fenced and focused on new capital, incremental production and strong local content delivery.” The President further clarified his mandate for the project, stating, “My expectation is clear: Bonga South West must reach a final investment decision within the first term of this administration.”
The Bonga South West field is expected to attract approximately $10 billion in direct capital investment, with the remaining $10 billion allocated to operating expenses and related spending over the project’s lifecycle. During the discussions, Sawan indicated that while Shell is encouraged by the new regulatory environment, the company expects to reach a Final Investment Decision (FID) by 2027. This timeline aligns with Shell’s strategic pivot toward deepwater assets following the divestment of its Nigerian onshore business. Sawan also expressed the global energy giant’s interest in participating in Nigeria’s upcoming exploration license rounds, signaling a long-term commitment to the country’s offshore potential.
The move comes as Nigeria seeks to reverse years of declining investment in its energy sector by offering more competitive terms to international oil companies (IOCs). Over the past year, Shell has already demonstrated significant capital commitment to the region, investing $5 billion in the Bonga North development and $2 billion in the HI gas project, which supplies the Nigeria LNG plant. By acquiring an additional stake from TotalEnergies last year, Shell increased its ownership in the Bonga field to 65%, a move that analysts say underlines the company’s intent to maintain dominance in Nigeria’s deep-offshore corridor.
Special Adviser to the President on Energy, Olu Arowolo Verheijen, noted that the Bonga North FID taken in 2024 was a critical step in maintaining output at the existing Bonga floating production, storage, and offloading (FPSO) facility. The new incentives for Bonga South West are intended to build on this momentum, providing the fiscal certainty required for Shell and its partners to commit to the massive $20 billion outlay. As the administration continues its raft of regulatory reforms, the focus remains on ensuring that these deepwater projects translate into sustained increases in national daily crude production and increased foreign exchange inflows.
