By Chioma Phillips
Royal Dutch Shell, one of the world’s largest energy companies, has signalled a bold $20 billion investment commitment aimed at revitalising deep-water oil production in Nigeria’s offshore waters — a move that could reshape the fortunes of the nation’s oil sector and signal renewed confidence among international investors in Africa’s most important hydrocarbon producer.
The potential investment, centred on the Bonga South West deep-water oilfield, comes amid a backdrop of policy reform, fiscal incentives, and intensified dialogue between Shell’s leadership and Nigeria’s government — particularly President Bola Ahmed Tinubu. This multi-billion-dollar bet frames Nigeria’s long-anticipated return to deep-water production growth after years of stagnation in upstream investment and security headwinds.
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The Bonga field — where this new strategy is anchored — is a deep-water oil development located off the Niger Delta, first brought online in 2005 by Shell’s Nigerian subsidiary, Shell Nigeria Exploration and Production Company (SNEPCo). The original Bonga field marked Nigeria’s first major deep-water success, significantly increasing the country’s exportable crude and setting a template for ultra-deep-water operations.
Since then, deep water has remained one of the most promising hydrocarbon frontiers in West Africa. However, Nigeria’s upstream sector has faced persistent obstacles including declining production, pipeline vandalism and theft, regulatory uncertainty, and a lack of new investment. The combined effect has been a erosion of Nigeria’s once-dominant position in global crude markets, with output slipping below the government’s ambitions.
Shell’s renewed focus on deep water — particularly the Bonga South West development — signals an attempt to reverse this trend, unlocking reserves that have remained largely untapped for more than a decade.
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In discussions with Nigerian authorities, Shell’s CEO Wael Sawan flagged the company’s plans to advance the Bonga South West/Aparo field, which could see total spending approaching $20 billion across exploration, drilling, infrastructure and production phases.
The Nigerian presidency has confirmed that targeted, investment-linked fiscal incentives will be adopted to enable the project, focusing on new capital, incremental production, local content and in-country value addition. This type of incentive — more specific than broad tax breaks — is designed to reassure investors that returns will not be eroded by unfavourable policies or unpredictable fiscal burdens.
President Tinubu has been explicit: he expects the project to reach a Final Investment Decision (FID) within his first term, setting an informal deadline of May 2027.
The Bonga South West Opportunity
The Bonga South West development, often abbreviated BSW/A, lies some 120 kilometres off the coast in deep water — typically over 1,000 meters below the sea surface. The field is believed to hold significant recoverable reserves, possibly in the hundreds of millions of barrels of oil equivalent, although exact estimates vary between parties.
Technical plans would likely involve drilling 15-20 new wells and tying them back to the existing Bonga FPSO (Floating Production, Storage and Offloading) vessel — a strategy that keeps capital cost lower by repurposing existing infrastructure rather than building an entirely new production vessel. In its heyday, Bonga has been capable of producing over 200,000 barrels per day, and the new development could potentially add up to 150,000 bpd to Nigeria’s crude tally.
This revitalisation builds on a sequence of investments Shell has already takenA $5 billion final investment decision on the Bonga North deep-water project in December 2024, which ties back to existing Bonga infrastructure and is forecast to produce up to 110,000 bpd by around 2030.
Progress on the HI gas project — an offshore gas development that will supply approximately 350 million cubic feet per day to Nigeria LNG’s Bonny facilities, underscoring Shell’s integrated approach to gas as well as liquids.
The new commitment multiplies the scale of investment. A $20 billion spend would make Bonga South West one of the largest upstream capital projects in Nigeria in recent memory.
Nigeria’s Energy Policy Reset
Shell’s renewed commitment comes as the Nigerian government has moved to overhaul policy, aiming to attract back major oil investors who previously scaled back activity due to political and regulatory instability.
Under the leadership of President Tinubu, Nigeria has introduced a series of reforms that include simplified approvals, clearer fiscal frameworks and targeted incentives for large-scale projects. These moves have been explicitly tied to efforts to boost crude output — which has sometimes languished below 1.4 million barrels per day in recent years — and to attract foreign direct investment amid competition from other African producers.
Significant, too, is the fact that Shell — historically one of the largest operators in Nigeria — has divested much of its onshore and shallow-water portfolio. Late in 2024 and into 2025, Shell completed the sale of its onshore assets in the Niger Delta to Renaissance Africa Energy for roughly $2.4 billion, marking a strategic pivot away from onshore production in favour of offshore deep water and gas.
This aligns with Shell’s global strategy: over the past decade, the supermajor has restructured its portfolio to focus on higher-margin assets, integrated gas projects, and deep-water developments where technical barriers and capital requirements can yield substantial long-term returns.
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