Nigeria unveils deep-offshore oil incentives

Nigeria has approved a new deep offshore investment framework aimed at unlocking up to US$50 billion in oil and gas projects. The policy is implemented through the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026, and is intended to restart large capital-intensive offshore developments that have been delayed. The Presidency announced the approval and key details of the framework on 11 August 2026.

The initiative focuses on deepwater assets and seeks to attract substantial new capital by adjusting the fiscal environment for eligible projects. It is structured to give investors clearer visibility on how projects can qualify for tax reliefs and how those incentives will be applied in practice.

The new framework replaces ad hoc, project-by-project fiscal negotiations with a rules-based investment architecture. It introduces transparent eligibility criteria and clear implementation procedures intended to provide greater certainty for investors evaluating long-term offshore projects.

By setting out standardised conditions for accessing tax remissions, the order is designed to streamline decision-making for both the government and private operators. This approach is aimed at reducing delays associated with individual negotiations and improving predictability around project economics.

The framework is designed to initially support the approximately US$10 billion Bonga South West development. This deepwater project is identified as the first to benefit from the new incentive regime, positioning it as a test case for the updated fiscal structure.

Support for Bonga South West under the order signals a focus on large-scale offshore investments capable of contributing materially to Nigeria’s production and revenue base. The emphasis on this project highlights the government’s intent to move stalled deepwater developments toward final investment decisions.

NNPC Limited, acting as the Federal Government’s nominated counterparty under Production Sharing Contracts, is authorised to proceed with amendments to eligible PSCs required to implement the incentives. This mandate gives the national oil company a central role in embedding the new framework into existing contractual arrangements.

Amending PSCs is expected to align contract terms with the provisions of the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026. This alignment is key to making the incentive framework operational across qualifying deep offshore developments.

The policy includes a strong local content dimension. Qualifying projects are expected, where commercially and technically feasible, to maximise execution within Nigeria to strengthen domestic engineering, fabrication, marine logistics, technical services and project management capabilities.

The Presidency stated that the framework followed President Bola Tinubu’s engagement with Shell chief executive Wael Sawan, after which the President directed the development of measures to unlock the next wave of deep offshore investment. The order emerged from an inter-agency process and is positioned as a key instrument for attracting large-scale offshore capital.