President Bola Tinubu has approved a package of investment-linked incentives for Shell’s proposed Bonga South West deepwater oil project, as Nigeria continues efforts to attract capital into its offshore petroleum sector and strengthen medium-term production prospects.
Reuters reported on January 23, 2026, that the approved incentives are tied to investment performance rather than broad concessions, reflecting an approach aimed at encouraging new capital inflows while aligning with Nigeria’s evolving regulatory framework for oil and gas.
The move is significant because Nigeria’s offshore assets are increasingly central to sustaining crude output, particularly as onshore operations remain exposed to security risks and disruptions. Deepwater projects also typically require long-term financing, stable fiscal terms, and strong execution capacity due to their high capital intensity.
According to the Reuters report, Tinubu expects Shell to reach a Final Investment Decision (FID) on the Bonga South West project within his first term. Reuters also reported that Shell has invested about $7 billion in Nigeria since Tinubu took office in 2023 and disclosed plans tied to the Bonga South West development.
For Nigeria, the incentive approval signals a policy preference for unlocking production growth through targeted, performance-based frameworks—especially for projects that can bring higher output and foreign exchange earnings. Analysts note that greater offshore activity can support government revenues, strengthen FX supply, and improve confidence in the investment climate.
However, sector experts also caution that incentives alone will not resolve all constraints. Nigeria still faces issues around contract stability, regulatory implementation capacity, and community and environmental governance—although these challenges are typically more pronounced onshore than offshore.
If Shell proceeds to FID on schedule, the project could become a major reference point for Nigeria’s deepwater investment narrative, potentially influencing other offshore developments and partnerships in the years ahead.
