President Bola Tinubu has signed the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026, introducing a rules-based fiscal framework aimed at unlocking up to $50 billion in new deep offshore investment, starting with Shell’s approximately $10 billion Bonga South West project.
The framework replaces project-by-project negotiations with defined tax incentives intended to give investors greater certainty and improve the commercial viability of long-delayed offshore developments. NNPC said the reform could accelerate Final Investment Decisions and support Nigeria’s target of raising crude production to 3 million barrels per day by 2030.
For qualifying oil projects with reserves of up to 400 million barrels, the standard production tax credit is $3 per barrel or 20% of the fiscal oil price, whichever is lower. Projects above 400 million barrels can receive $4.50 per barrel or 20% of the fiscal oil price, subject to production limits. Future leases also qualify for an additional $1 per barrel credit. Combined standard and supplementary credits are capped at $11.50 per barrel for oil projects and $8 per barrel of oil equivalent for non-associated gas projects.
The order also provides for profit-oil resets and ring-fencing for eligible developments, while requiring local execution where commercially and technically feasible.
For investors, the key potential benefit is increased upstream investment and production, which could strengthen activity across Nigeria’s oil-services and local supply chains. NNPC said recent petroleum-sector reforms have already generated more than $34 billion in investment commitments.
Investors should watch the implementation of the framework, amendments to eligible production-sharing contracts and the progression of Bonga South West, Zabazaba and Owowo toward Final Investment Decisions. Existing deep offshore leases have until December 31, 2029 to reach FID and qualify for the full standard incentive.
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