• Targets over $50bn investment, oil production boom

The Federal Government has approved a new fiscal framework for petroleum investment incentives aimed at unlocking up to $50 billion in investments and reviving major deep offshore oil and gas developments that have remained stalled for years.

The reform comes as Nigeria seeks to reverse prolonged underinvestment in its deepwater petroleum assets, increase crude oil and condensate production and strengthen government revenues amid mounting fiscal pressures, high debt obligations and inflationary challenges.

President Bola Ahmed Tinubu announced the reform on Tuesday, saying the new investment architecture was designed to restore confidence in Nigeria’s deep offshore sector and attract the large-scale capital required to develop projects with huge upfront costs and long investment horizons.

According to a statement issued by the Presidential Special Adviser on Information and Strategy, Bayo Onanuga, the decision followed Tinubu’s engagement with Shell plc Chief Executive Officer, Wael Sawan, during which the President directed the development of measures capable of unlocking the next wave of investment in Nigeria’s deep offshore petroleum sector.

The new regime replaces the previous practice of negotiating fiscal incentives separately for individual projects with a transparent, rules-based framework intended to provide investors with greater certainty and improve Nigeria’s competitiveness in the global competition for energy capital.

The framework is expected to facilitate a new generation of deep offshore developments, beginning with the approximately $10 billion Bonga South West project, while establishing an investment architecture that can be applied to other qualifying developments across the petroleum industry.

The reform has been given legal effect through the Deep Offshore Oil and Gas Projects Incentives (Tax Remission) Order, 2026, which sets out eligibility requirements and implementation procedures for projects that qualify for the incentives.

Rather than providing a narrowly targeted concession to a single development, the Federal Government has translated the presidential directive into a broader framework covering multiple categories of qualifying deep offshore projects.

The new architecture is also expected to enable NNPC Limited, as the government’s nominated counterparty under Production Sharing Contracts, to undertake amendments to eligible PSCs required to implement the incentives.

For a country whose oil industry has struggled with declining production, ageing assets, project delays and fierce competition for international capital, the reform represents a significant attempt to make Nigeria’s deepwater resources commercially investable again.

It also comes with an important domestic industrialisation component. The government said qualifying projects would be expected to maximise execution within Nigeria wherever commercially and technically feasible.

President Tinubu’s Special Adviser on Oil and Gas, Olu Arowolo-Verheijen, said the requirement would help expand Nigerian participation in deep offshore project delivery by strengthening domestic engineering, fabrication, marine logistics, technical services and project management capabilities.

“The objective is 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,” she said.

The policy therefore goes beyond the immediate objective of attracting foreign capital. Its broader ambition is to ensure that increased investment in Nigeria’s offshore petroleum resources generates a wider industrial and economic multiplier effect for Nigerian companies, workers and service providers.

If successfully implemented, the framework could trigger a chain reaction across the petroleum value chain, from engineering and fabrication to marine transportation, logistics, technical services and professional support, while creating skilled employment and expanding opportunities for indigenous businesses.

Tinubu commended the Federal Ministry of Justice, Federal Ministry of Finance, Federal Ministry of Petroleum Resources, Nigeria Revenue Service, NNPC Limited, Nigerian Upstream Petroleum Regulatory Commission, Nigerian Content Development and Monitoring Board, investing partners and other industry stakeholders for their technical contributions to the development of the framework.

The President said the reform was based on the recognition that the availability of petroleum resources alone was no longer sufficient to guarantee investment, particularly as energy companies and investors have increasingly mobile capital and multiple jurisdictions from which to choose.

“The countries that attract long-term investment are not necessarily those with the greatest natural resources. They are the ones that provide the greatest certainty,” Tinubu said.

He added that the reform demonstrated his administration’s determination to establish an investment environment characterised by clear rules, strong institutions and enduring partnerships.

“We are creating the conditions for capital to flow, for Nigerian businesses to grow, for our people to prosper and for our natural resources to deliver lasting national value,” he said.

The significance of the policy lies largely in its attempt to address one of the structural weaknesses that has constrained Nigeria’s deep offshore petroleum sector: investment uncertainty.

Deepwater projects require billions of dollars in upfront expenditure, sophisticated technology and years of development before production and returns can be realised. Consequently, uncertainty over fiscal terms can make otherwise commercially viable projects difficult to sanction.

By moving from project-by-project negotiations to predetermined rules and eligibility conditions, the government is seeking to give investors a clearer basis for assessing the economics of prospective developments.

The immediate test will be whether the framework succeeds in moving projects such as Bonga South West from prolonged delay to final investment decisions and eventual production.

For Nigeria, the stakes are considerable. A successful revival of major deep offshore developments could increase crude and condensate output, expand government revenues, create thousands of direct and indirect employment opportunities and stimulate demand across the domestic oilfield services industry.

It could also strengthen local content development by ensuring that a greater proportion of engineering, fabrication, logistics and technical work associated with the projects is executed within Nigeria.

Ultimately, the new fiscal architecture represents an effort to turn Nigeria’s vast deepwater petroleum reserves from largely untapped potential into productive economic assets. Its success, however, will depend not only on the attractiveness of the incentives but also on regulatory consistency, contract certainty, institutional coordination and the government’s ability to sustain a predictable business environment over the decades-long lifespan of offshore investments.