en.Wedoany.com Reported - Nigeria has approved a production-linked tax credit policy for Shell Plc's deepwater project, a measure that will also be available to other oil companies in the future, according to people familiar with the matter, aiming to help Africa's largest oil producer boost output.
The terms approved by President Bola Tinubu are intended to drive a final investment decision for the Bonga Southwest Aparo project, said the people, who asked not to be named as the information is not public. Under the terms, Shell and its partners will receive a tax rebate of $11.50 per barrel of crude oil, more than double the standard level. The incentive will be open to other producers' new deepwater projects and will last at least until 2029, the people said. The state-owned oil company revealed in March that the Bonga Southwest project is expected to attract $20 billion in foreign direct investment and produce 150,000 barrels per day once operational.
A Shell spokesperson said the company continues to advance the project toward development, with significant progress to be announced through official channels. The Nigerian National Petroleum Co. and the president's energy adviser did not respond to requests for comment. This measure is one of several industry incentive programs launched by Tinubu through executive orders since taking office in 2023, aimed at revitalizing the oil sector plagued by rampant theft, infrastructure aging, and shrinking investment. A previous executive order capped such tax credits at 20% of a licensee's annual tax liability to offset operating costs, a ratio the government says is already above the global average.
Data released Monday by the Nigerian Upstream Petroleum Regulatory Commission showed the country's average daily output rose to 1.56 million barrels in June, the highest monthly level since April 2020, indicating early results from production-boosting efforts.
However, investors have doubts about the long-term effectiveness of Tinubu's executive orders, which could be overturned by courts or revised by future presidents. According to internal memos obtained by Bloomberg, Shell has requested that Nigeria formally publish the tax credit order in the official government gazette to ensure its legal binding force, and the process is underway.
