President Bola Tinubu has approved a landmark reform replacing project-by-project negotiations with a transparent, rules-based framework designed to unlock up to $50 billion in deep offshore investment. The Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026, replaces ad-hoc dealmaking with transparent eligibility criteria and clear implementation processes.
The reform establishes a framework to support the next generation of deep offshore developments, beginning with the approximately $10 billion Bonga South West project operated by Shell. Nigeria's deep offshore sector has struggled to attract new investment in recent years as existing fields mature. Despite the Petroleum Industry Act, major international oil companies have remained cautious about committing capital to new offshore developments.
The initiative followed President Tinubu's engagement with Shell CEO Wael Sawan, during which the President directed the development of measures to unlock Nigeria's deep offshore investment pipeline. Rather than pursuing project-specific solutions, the Federal Government transformed that directive into a comprehensive investment framework applicable across multiple categories of qualifying developments.
The key facts
Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026, signed August 6, gazetted August 10
Fiscal regime offers production tax credits of up to $11.50 per barrel for qualifying oil developments
Bonga South West project expected to cost approximately $10 billion and produce around 150,000 barrels per day
NNPC Limited authorised to proceed with amendments to eligible Production Sharing Contracts
Existing deep offshore leases eligible if Final Investment Decision taken between effective date and December 31, 2029
Why it matters
Projects qualifying under the framework will maximise execution within Nigeria wherever commercially and technically feasible, strengthening domestic engineering, fabrication, marine logistics, technical services and project management. For Nigerian investors, this means potential multiplier effects across the energy services value chain. Firms with exposure to fabrication yards, marine logistics, and subsea engineering stand to benefit.
Watch Seplat Energy (SEPLAT), Oando (OANDO), and listed service providers.
The $50 billion figure represents the government's estimate of investment the framework could unlock rather than capital that has already been committed. The prolonged absence of new deepwater investments has slowed Nigeria's ability to compete with emerging offshore producers such as Angola, Brazil and Guyana. Success will hinge on whether majors move beyond policy approval to actual Final Investment Decisions.
What to look out for
The government expects the new framework to help move the Bonga South West project and other qualifying developments towards final investment decisions. Still, success will ultimately depend on investor participation, contract implementation, regulatory consistency and whether the targeted projects secure final approvals and financing. Shell's next move on Bonga South West will signal whether the incentives are enough.
SUBSCRIBE
Become smarter in just 5 minutes
Daily Bread News delivers Nigerian business news in easy-to-digest, clear and concise formats 🍞