FG Grants Shell $11.50 Per Barrel Tax Credit For $20bn Bonga Project

The Federal Government has approved an $11.50 per barrel tax credit for Shell’s Bonga Southwest Aparo deepwater project, a move aimed at unlocking an investment estimated at about $20 billion.

The incentive is tied to production from the project and is meant to improve the economics of one of Nigeria’s largest offshore oil developments.

Vanguard reported that the credit was offered to Shell to help move the Bonga deepwater project forward. Punch also reported that the Federal Government had approved a special production-linked tax credit for Shell Plc’s Bonga Southwest Aparo project.

The project has long been watched by Nigeria’s oil industry because deepwater developments require heavy upfront spending and can be delayed when investors judge fiscal terms to be weak.

The new tax credit signals that Abuja is trying to keep major offshore projects moving while it pushes for higher oil output and more investment in the energy sector.

For Nigeria, the stakes are straightforward: deepwater projects can add production, support government revenue and bring in foreign capital. But the deal will also draw attention to how much tax relief the government is willing to offer large oil companies to secure investment.

Sources: Vanguard, Punch