Amanze Chinonye
The Federal Government has approved a production-linked tax credit of $11.50 per barrel for Shell Plc’s Bonga Southwest Aparo (BSWA) deepwater oil project, in a move aimed at unlocking an estimated $20 billion investment and boosting Nigeria’s crude oil production.
The incentive, approved by President Bola Tinubu, grants Shell and its partners a rebate on every barrel of crude produced from the project and is expected to improve the project’s commercial viability as it moves towards a Final Investment Decision (FID), according to a Bloomberg report.
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The report, citing sources familiar with the matter, said the incentive is more than double the standard production-linked credit under Nigeria’s existing fiscal framework and will also be extended to other international oil companies developing new deepwater projects in the country.
The tax credit is expected to remain in place until at least 2029.
The Bonga Southwest Aparo project is one of Nigeria’s largest undeveloped deepwater oil assets and is projected to attract about $20 billion in investment.
Operated by Shell Nigeria Exploration and Production Company (SNEPCo) in partnership with the Nigerian National Petroleum Company Limited (NNPC Ltd) and other stakeholders, the project is expected to produce about 150,000 barrels of crude oil per day when completed.
Shell confirmed that it was continuing work towards developing the project, adding that major updates would be communicated through official channels.
The latest incentive forms part of the Federal Government’s efforts to revive investment in the upstream oil sector, which has suffered years of declining capital inflows due to crude oil theft, pipeline vandalism, insecurity, infrastructure challenges and regulatory concerns.
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The government has introduced several reforms under the Petroleum Industry Act (PIA) framework to improve the competitiveness of Nigeria’s oil and gas sector and attract new investments.
The move comes as Nigeria seeks to increase crude oil output and strengthen its position as a preferred destination for energy investment. Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) showed that crude oil production averaged 1.56 million barrels per day in June, the country’s highest monthly output since April 2020.
Stakeholders expect the incentive to provide fresh momentum for the Bonga Southwest Aparo project, which could become one of Nigeria’s biggest oil and gas developments if it reaches a final investment decision and proceeds to production.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
