By Abubakar Yunusa
Nigeria has granted Shell Plc a $11.50 per barrel production-linked tax credit for the Bonga Southwest Aparo deepwater oil project.
On January 22, President Bola Tinubu approved the gazetting of “investment-linked” incentives to support the proposed Bonga south-west deep-offshore oil project by Shell Plc and its partners.
According to a Bloomberg report on Monday, the incentive was approved by Tinubu to push the Bonga Southwest Aparo project toward a final investment decision.
The publication, quoting sources who asked not to be identified because the information isn’t public, said the tax credit gave “Shell and its partners a rebate of $11.50 a barrel of crude produced, more than double the standard rate”.
“The sign-off clears one of the last hurdles for a project that has been in limbo for close to two decades,” Bloomberg said.
The Nigerian National Petroleum Company (NNPC) Limited said the approval signals the first final investment decision on a Nigerian deepwater production-sharing contract asset since 2008, “a gap that has weighed on the country’s efforts to keep pace with deepwater rivals such as Angola, Brazil and Guyana”.
“The fiscal package Tinubu signed off on also resolves a dispute-settlement agreement dating to 2021, removing another obstacle that had kept Shell and its partners from committing capital to the field, located roughly 120 kilometres off Nigeria’s coast,” the publication said.
“Bonga Southwest Aparo is expected to be a significant addition to Nigeria’s production base. NNPC has said the project could draw about $20 billion in foreign direct investment and, once online, deliver roughly 150,000 barrels of oil a day along with about 140 million cubic feet of gas daily, while supporting more than 5,000 direct and indirect jobs.”
According to the report, the negotiations that produced the enhanced credit involved NNPC as concessionaire, the Nigeria Revenue Service (NRS), Olu Verheijen, presidential energy adviser, and Wael Sawan, Shell’s chief executive officer (CEO).
Bloomberg said this followed a courtesy visit by Sawan to the presidential villa, adding that people close to the talks said the visit helped accelerate months of technical and commercial back-and-forth.
Bayo Ojulari, group chief executive officer (CEO) of NNPC, said the approval is a breakthrough after years of inactivity.
“For nearly two decades, the Bonga Southwest project remained stalled,” he said.
Ojulari credited the administration’s push and the company’s advocacy for unlocking the deal.
The publication said extending the $11.50-a-barrel rebate beyond Bonga Southwest Aparo would mark a broader shift in how Nigeria courts deepwater capital.
“The standard production tax credit under the country’s petroleum industry law is less than half that amount, meaning other operators, including majors such as ExxonMobil, Chevron and TotalEnergies, all of which hold deepwater acreage off Nigeria, could seek similar terms for their own stalled or prospective projects,” the report said.
The prospect, Bloomberg said, underscores the “trade-off facing Tinubu’s government: sacrificing near-term revenue per barrel in exchange for unlocking investment that has sat on the sidelines for years”.
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