New deepwater tax incentives target $50bn investment

New tax incentive framework aims to attract $50 billion into deepwater oil sector to reverse production decline.

President Bola Tinubu has approved a new tax incentive framework aimed at attracting up to $50 billion in investment into Nigeria’s stalled deepwater oil sector. The Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026, replaces project-by-project negotiations with fixed eligibility rules and timelines for investors. The government expects the policy to encourage major projects, including Shell’s Bonga South West, which could require about $10 billion in investment. However, Shell’s final investment decision is still pending.

The reform comes as Nigeria seeks to reverse declining oil production and compete with countries such as Angola, Namibia and Mozambique for global energy investment. Officials also said qualifying projects must maximise local participation, supporting Nigerian engineering, fabrication, marine services and skilled employment. The government hopes the new framework will provide investors with the long-term certainty needed to revive Nigeria’s deepwater industry.

This echoes the 2010s oil reform efforts, which also sought to attract investment but were undermined by regulatory uncertainty. The difference is that Nigeria is now competing with newer, more attractive plays in Namibia and Mozambique.

The winners: international oil companies, which gain long-term fiscal certainty; and the Nigerian government, which hopes to reverse declining production. The losers: environmental groups, who oppose deepwater drilling; and the Nigerian public, who must trust that the investment will translate into jobs and revenue.

Bottom Line: Tax breaks are meant to unlock $50 billion in deepwater investment. The question is whether Shell will bite or stay on the sidelines.