KEY POINTS
- Tinubu approved a new framework to attract up to $50bn in offshore oil investment.
- Shell’s $10bn Bonga South West project is among the developments targeted.
- The plan aims to boost investment, jobs and local participation in Nigeria’s oil sector.
President Bola Tinubu has approved a new regulatory and tax framework for offshore oil and gas projects as Nigeria seeks to attract as much as $50 billion in fresh investment into the sector.
The Federal Government said the new framework is designed to make Nigeria more attractive to international oil companies and encourage the development of offshore projects that have been delayed for years.
The approval comes as Nigeria continues efforts to increase investment in its oil industry, which has faced challenges including regulatory uncertainty, high development costs and growing competition from other oil-producing countries.
The new policy is expected to provide clearer rules for investors and create a more predictable environment for companies considering major offshore projects in Nigeria.
According to the Presidency, the new Deep Offshore Oil and Gas Projects Incentives framework will replace the previous system of negotiating incentives separately for individual projects.
Instead, eligible projects will operate under a rules-based system backed by a new tax remission order.
The government said this approach is intended to give investors greater certainty when making decisions about large and expensive offshore developments.
Presidential spokesperson Bayo Onanuga said the framework would strengthen Nigeria’s ability to compete for international capital.
The policy is also expected to reduce uncertainty around the financial terms attached to offshore projects, making it easier for investors to assess potential returns before committing billions of dollars.
Bonga South West project among major beneficiaries
One of the projects expected to benefit from the new framework is Shell’s long-delayed Bonga South West development.
The project has an estimated value of about $10 billion and is expected to reach a final investment decision in 2027.
The project is regarded as an important potential source of new offshore investment for Nigeria.
Its development could also create opportunities for Nigerian companies involved in engineering, construction, logistics, equipment supply and other services linked to the oil and gas industry.
The government expects the new framework to help create conditions that will encourage the project and other offshore developments to move towards implementation.
The approval also allows NNPC Ltd to amend eligible production-sharing contracts with oil producers.
Production-sharing contracts are agreements under which oil companies and governments share the output and revenues from petroleum projects according to agreed terms.
The ability to amend eligible contracts is expected to help bring existing arrangements into line with the new framework.
This could make it easier for qualifying offshore projects to access the incentives and proceed under clearer and more predictable terms.
The new framework also includes provisions aimed at increasing local participation in offshore oil projects.
Qualifying projects are required to prioritise local execution where feasible.
This means more project-related activities could be carried out in Nigeria rather than being handled entirely by foreign companies or outside contractors.
The government expects this requirement to support job creation and strengthen Nigerian businesses involved in the oil and gas supply chain.
Local contractors and service providers could benefit from increased demand for engineering, construction, transportation, maintenance and other services as offshore projects move forward.
