The Federal Government has approved a special production-linked tax credit for Shell Plc’s Bonga Southwest Aparo deepwater oil project in a bid to unlock an estimated $20 billion in investment and boost Nigeria’s crude oil production.
According to a Bloomberg report, President Bola Tinubu approved fiscal terms granting Shell and its partners a tax credit of $11.50 for every barrel of crude oil produced from the project, more than double the standard incentive available under Nigeria’s current fiscal framework.
The incentive is expected to pave the way for a Final Investment Decision (FID) on the long-delayed Bonga Southwest Aparo project, one of Nigeria’s largest undeveloped deepwater oil assets.
Bloomberg, citing sources familiar with the matter, reported that the production-linked tax credit will also be extended to other international oil companies developing new deepwater projects in Nigeria and will remain in effect until at least 2029.
The move forms part of the Federal Government’s broader strategy to revive investment in the oil and gas sector after years of declining capital inflows caused by oil theft, pipeline vandalism, insecurity, ageing infrastructure and regulatory uncertainty.
The Bonga Southwest Aparo project is projected to attract about $20 billion in foreign direct investment.
According to the Nigerian National Petroleum Company Limited (NNPCL), the field is expected to produce about 150,000 barrels of crude oil per day when it begins operations, significantly increasing Nigeria’s oil production capacity.
Responding to enquiries, a Shell spokesperson confirmed that work on the project is progressing.
“Shell continues to progress the Bonga Southwest Aparo project toward development and will communicate material updates through official channels,” the company said.
Officials of the NNPCL and the Office of the President’s Special Adviser on Energy did not comment on the report.
The latest incentive builds on a series of reforms introduced by the Tinubu administration since 2023 to restore investor confidence in Nigeria’s petroleum industry.
The government has issued several executive orders aimed at improving fiscal competitiveness, attracting fresh capital and unlocking stalled oil and gas projects.
Industry stakeholders believe the enhanced tax credit will improve the commercial viability of costly deepwater developments, where production costs are significantly higher than those of onshore operations.
The incentive comes as Nigeria records a gradual recovery in crude oil production.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently reported that crude oil production rose to an average of 1.56 million barrels per day in June 2026, the country’s highest monthly output since April 2020.
The increase has been attributed to improved pipeline security, greater operational stability and renewed investment in upstream activities.
Despite the incentive, concerns remain over the long-term certainty of executive orders, which can be amended or challenged by future administrations.
To address this, Shell has reportedly requested that the Federal Government publish the tax-credit order in the Official Gazette to strengthen its legal standing and provide greater certainty for investors.
According to Bloomberg, government officials have already begun the gazetting process.
The Federal Government hopes that unlocking projects such as Bonga Southwest Aparo will increase crude oil production, attract billions of dollars in foreign investment, create jobs and boost government revenue.
