President Bola Tinubu has approved a new framework meant to replace the ad hoc, project-by-project incentive negotiations that have long characterized dealings with international oil companies with a single, rules-based system open to any qualifying deep offshore development.
For years, Nigeria’s approach to attracting capital into its offshore fields relied on one-off negotiations, a slow, opaque process that investors often cited as a source of uncertainty.
The new order changes that calculus. Rather than crafting incentives for a single project, the government has built a framework anchored in the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026, that lays out fixed eligibility criteria and implementation steps applicable to an entire category of deep offshore developments, not just one.
The immediate beneficiary is expected to be the Bonga South West project, operated by Shell. The project is planned as the next major expansion of the Bonga deepwater complex, located roughly 120 kilometers offshore in the Gulf of Guinea, and would draw on existing infrastructure, including the Bonga floating production, storage, and offloading vessel, to hold down development costs.
Estimates of its price tag have varied across reports from roughly $10 billion to as much as $20 billion, reflecting the scale and complexity of a field that industry watchers have described as one of the largest deepwater developments still awaiting a final investment decision anywhere in the world.
Bonga South West is not new to Nigeria’s investment conversation; it has simply never gotten off the ground. The field’s development history spans more than 17 years, with earlier bid processes, including one launched in 2022, having been cancelled outright.
Discovered in 2001, the field straddles licence areas operated by Shell and Chevron, bringing in additional partners including Eni, ExxonMobil, and Russia’s Lukoil, which has complicated efforts to reach a unified sanction decision.
Momentum has been building over the past year, however. Shell restarted preparatory work by launching a new tender for a floating production, storage, and offloading unit, in what analysts described as the most tangible sign of progress on the project in years.
The renewed interest lines up with a broader pattern: international operators have been shifting attention toward Nigeria’s deep offshore fields, seen as more insulated from the pipeline vandalism and theft that have disrupted onshore production in the Niger Delta.
The reform follows directly from talks between Tinubu and Shell’s global chief executive, Wael Sawan. Tinubu had earlier told a Shell delegation led by Sawan that the incentives being developed were disciplined, targeted, and globally competitive, intended to draw in fresh capital without eroding government revenue, and that they would remain tied strictly to new capital, incremental output, and local content.
The president was explicit about his timeline, saying Bonga South West must reach a final investment decision within his administration’s first term.
Officials have pointed to Shell’s recent track record in Nigeria as evidence the strategy is already paying dividends. Since the Tinubu administration took office in 2023, Shell has invested some $7 billion in the country, most of it channelled into the Bonga North and HI gas projects.
Sawan, for his part, has said Nigeria’s investment climate has improved markedly under Tinubu and that Shell remains confident in the country’s long-term prospects.
Beyond the fiscal architecture, the government has framed the reform as a vehicle for industrial development at home.
Special Adviser on Energy Olu Verheijen has stressed that projects qualifying under the new order will be required to maximize in-country execution engineering, fabrication, marine logistics, technical services, and project management wherever feasible, with the stated goal of building Nigeria into a regional hub for offshore project delivery and deepening local supply chains and skilled employment.
Nigeria’s oil output has struggled to hit its own targets in recent years. Regulatory data show crude production averaging between 1.38 million and 1.53 million barrels a day over eleven months in 2025, well short of the government’s 2-million-barrel-a-day goal.
Against that backdrop, unlocking a wave of large, capital-intensive deepwater projects is central to the administration’s plan to reverse the decline, and Tinubu’s framing of the reform, that durable rules matter more than raw resource endowment in attracting long-term capital, signals an attempt to make policy predictability itself the country’s main selling point to global investors.
Whether the new framework succeeds will likely hinge on how quickly NNPC Limited can execute the required amendments to existing production sharing contracts and on whether Shell and its partners, still weighing project economics on one of the industry’s largest undeveloped deepwater prospects, are ready to commit to a final investment decision on the timeline Abuja has set.
WHAT YOU SHOULD KNOW
Nigeria has swapped its old case-by-case dealmaking for a single, transparent, rules-based framework to unlock deep offshore investment with the roughly $10-20 billion Bonga South West project as its first major test case.
After nearly two decades of delay, Nigeria is betting that policy certainty, not just resource wealth, is what will finally get Shell and its partners to a final investment decision, and Tinubu wants that decision locked in before his first term ends.
