On Wednesday, President Bola Tinubu ratified a reform aimed at harnessing the untapped potential in Nigeria’s deep offshore oil and gas sector. The reform could unlock up to $50 billion in fresh investment in the sector, starting with the long-delayed $10 billion Bonga South West project.
According to a statement by the president’s spokesperson, Bayo Onanuga, the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026, was signed on August 6 and published in the Federal Government’s Official Gazette on August 10.
For decades, investment by local and foreign oil companies has stalled owing to dishevelled framework negotiations and tiring discrete negotiations. Nigeria negotiated offshore oil deals project by project, with investors foot-dragging and dilly-dallying over terms for years before committing. This reform put an end to the arrangement.
According to Onanuga, the framework ditches the onerous and time-consuming old negotiation style for “transparent eligibility criteria, clear implementation processes and a durable investment architecture” designed to deepen investors’ confidence while protecting the country’s critical oil infrastructure and long-term interests
In other words: Rather than having a situation where every prospective investor and company comes to the negotiation table armed with their terms and conditions, any company embarking on deep offshore project will now play by a different set of rules.
Why Bonga South West matters
Bonga South West, the roughly $10 billion Shell-operated project, is the first big test run of the order. It’s one of several major offshore developments that have lain dormant for decades.
Onanuga disclosed that the new deepshore exploration framework was not unconnected to Tinubu’s engagement with Shell CEO Wael Sawan, during which the president “directed the development of the next wave of measures required to unlock Nigeria’s deep offshore investment pipeline.” But he also notes that it wasn’t built for Shell alone: he says the federal government turned that directive into a framework covering multiple categories of qualifying projects.
The local content demand
The reform also seeks to prioritise using local goods, services and workforce to capture as much value as possible in the country. The order is not just about investment in the country’s lucrative oil and gas sector and enormous material and financial benefits that come with it. It is about how much contribution Nigerians are making towards the success of the investment and what positive ripple effects it has on the economy.
The President’s special adviser on oil and gas, Olu Arowolo-Verheijen, said projects under the framework “will maximise execution within Nigeria wherever commercially and technically feasible, strengthening domestic engineering, fabrication, marine logistics, technical services and project management.”
Her stated goal: “not only to increase investment and production, but also to create skilled jobs, deepen local supply chains and position Nigeria as Africa’s regional hub for deep offshore project execution.”
The presidency says the framework followed an extensive inter-agency process involving the Ministry of Justice, Ministry of Finance, Ministry of Petroleum Resources, the Nigeria Revenue Service, NNPC Limited, the Nigerian Upstream Petroleum Regulatory Commission and the Nigerian Content Development and Monitoring Board, alongside industry operators.
Tinubu personally commended all parties for their “collaboration, technical expertise and commitment.”
The approval also clears NNPC Limited, as government’s counterparty in Production Sharing Contracts, to begin amending eligible contracts to match the new rules.
The bigger picture
The presidency framed the reform as a pragmatic and tactful play, noting that oil wealth alone doesn’t attract capital; certainty, assurance and confidence do.
“The countries that attract long-term investment are not necessarily those with the greatest natural resources,” he said. “They are the ones that provide the greatest certainty.”
He added that the reform reflects Nigeria’s “determination to build an investment environment defined by clear rules, strong institutions and enduring partnerships,” aimed at getting “capital to flow” and Nigerian businesses to grow.
Approving the reform is one bit and easy part of the new fiscal arrangement; getting investors to key into the new framework and invest their resources before the 2029 deadline is the next step. This may not be easy and straightforward even with the tax incentives due to other extraneous factors not captured by the Order. Also, it remains to be seen whether the promised certainty and assurance hold up once implementation begins.
