The Nigerian government has authorized a production-linked tax credit of $11.50 per barrel to Shell and its partners. This fiscal incentive aims to jumpstart the Bonga Southwest Aparo deepwater project, which has been stagnant for nearly 20 years. The initiative, sanctioned by President Bola Tinubu, is projected to catalyze approximately $20 billion in foreign direct investment.
Reports indicate that the incentive package, finalized on January 22, provides double the standard benefit mandated by the Petroleum Industry Act. This decision serves to resolve a 2021 dispute, removing significant barriers for the offshore field situated 120 kilometers from the coast. NNPC Ltd. officials view this as a historic development, marking the first Final Investment Decision for a deepwater production-sharing contract since 2008.
Upon reaching full operation, the site is expected to yield 150,000 barrels of oil and 140 million standard cubic feet of gas daily, while generating over 5,000 employment opportunities. Technical and commercial talks were fast-tracked following a meeting between President Tinubu and Shell CEO Wael Sawan.
Although the credit lowers short-term government receipts, the administration views this as a necessary trade-off to boost crude production and compete with nations like Guyana and Brazil. This shift in fiscal policy may also encourage other energy majors, such as Chevron and ExxonMobil, to pursue similar investment frameworks for their own assets.
