28 January, 2026
The decision, taken on 23rd January 2026, clears a major hurdle that has stalled progress on the Bonga South-West, which remains one of the most significant deepwater opportunities in Nigeria’s offshore portfolio.
Nigeria has taken one of its most consequential upstream decisions in recent years, approving targeted fiscal incentives for Shell’s Bonga South-West deepwater project in a move widely seen as a turning point for offshore investment. The approval marks a renewed effort by the Federal Government to revive deepwater activity, restore investor confidence, and reposition Nigeria in an increasingly competitive global offshore market.
The decision, taken on 23 January 2026, clears a major hurdle that has stalled progress on the Bonga South-West (also known as Bonga South-West Aparo) development for years. Operated by Shell Nigeria Exploration and Production Company (SNEPCo) in partnership with NNPC Limited, the project is one of the most significant deepwater opportunities in Nigeria’s offshore portfolio.
Unlike the broad fiscal concessions that characterized earlier investment cycles, the incentives approved for Bonga South-West are performance-based. They are designed to unlock value only when real capital is committed and project milestones are achieved. This shift reflects a more disciplined approach by government, one that seeks to attract capital while protecting long-term national value.
The approval follows high-level engagements between President Bola Ahmed Tinubu and Shell’s Chief Executive Officer, Wael Sawan, who has been vocal about the need for fiscal clarity and regulatory stability to justify large-scale offshore investments. These discussions reinforced Shell’s interest in expanding its deepwater footprint in Nigeria, provided the operating environment aligns with global capital expectations.
At stake is a project with an estimated investment size of up to 20 billion US dollars, involving a deepwater subsea development tied back to the existing Bonga FPSO in water depths of around 1,000 meters. If sanctioned, Bonga South-West would rank among the largest offshore investments Nigeria has seen in over a decade, with a target Final Investment Decision expected within the tenure of the current administration.
Bonga is not an untested asset. The original Bonga Field, which came onstream in 2005, was Nigeria’s first deepwater oil development and remains one of its most successful offshore projects. Bonga South-West builds on that legacy, offering a lower-risk brownfield expansion, faster time to first oil through existing infrastructure, and improved capital efficiency in a world where oil companies are under intense pressure to spend selectively.
For many industry observers and actors, the importance of Bonga South-West goes beyond barrels. It is widely viewed as a bellwether project, one whose success could unlock other long-delayed deepwater developments across Nigeria’s offshore terrain. Projects such as Zabazaba, Owowo, and Preowei are often mentioned in the same breath, with investors watching closely to see whether Bonga South-West moves from policy approval to steel in the water.
The broader policy context is critical. Over the past decade, deepwater capital steadily shifted away from Nigeria toward jurisdictions such as Guyana, Brazil, Angola, and more recently Namibia. Fiscal uncertainty, slow approvals, and concerns around contract stability weakened Nigeria’s competitive position. The Petroleum Industry Act was intended to address many of these challenges, and the Bonga South-West incentive approval is one of the clearest signals, yet that Nigeria is prepared to compete for global capital with flexible, project-specific solutions.
If the project reaches Final Investment Decision, the implications are significant. Offshore crude production could receive a meaningful boost in the late 2020s, investor confidence in Nigeria’s upstream sector would strengthen, and indigenous service companies could benefit from renewed offshore activity. Government revenues would also improve, not through volume alone, but through a structure that balances investor returns with national interest.
It is important to note that incentive approval is not Final Investment Decision. Commercial alignment among partners, further cost optimization, board-level approvals at Shell, and favorable market conditions still lie ahead. However, most industry watchers agree on one thing: Bonga South-West is closer to reality today than it has been in years.
Bonga once symbolized Nigeria’s arrival on the global deepwater stage. Bonga South-West may now come to symbolize its return. More than a project update, this development represents a defining test of whether Nigeria’s upstream reforms can translate into investment, steel in the water, rigs on location, barrels flowing to market as a sustained production in a capital-constrained world.
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