ABUJA, Nigeria — Nigeria’s deepwater oil sector, dormant for more than a decade, is drawing renewed attention from the world’s largest oil companies as a 2029 deadline for the country’s most generous tax credits pushes operators toward a wave of final investment decisions.
Deepwater remains the preferred conventional growth play for most major oil companies hunting for large-scale resources to anchor their portfolios into the next decade. Nigeria, still Africa’s largest oil producer, is positioning itself to compete for that capital. The country’s deepwater sector had gone more than ten years without a major new investment before Shell’s Bonga North project reached final investment decision (FID) in late 2024.
Since Shell’s undisclosed investment, the drought in Nigeria’s deepwaters now appears to be ending. Wood Mackenzie analysts, speaking at last week’s Nigeria Oil and Gas conference in Abuja, said the country’s deepwater industry could be on the cusp of a new investment era.
They also pointed to four major greenfield projects that combined could commercialize more than 2 billion barrels of oil equivalent, calling Nigeria’s offshore acreage a “highly prized deepwater sector” that had simply been waiting for the right terms to draw capital back.
Tax credit policy reset behind the rebound
The shift traces back to a policy push under President Bola Tinubu’s government, which has set targets of 3 million barrels a day of oil output and 12 billion cubic feet a day of gas production by 2030 and has been working to reverse years of decline through regulatory reform and fiscal incentives.
In 2022, Nigeria extended six legacy deepwater contracts between state-owned NNPC Ltd. and international oil companies. Two years later the government went further, introducing tax credits that offer the most favorable terms to projects reaching final investment decision before 2029.
That 2029 deadline is now shaping the pace at which operators are moving.
No doubt, Nigeria’s deepwater acreage has long been Big Oil territory, and the current opportunities align closely with what the majors say they want for their post-2030 portfolios. Shell, ExxonMobil, Eni and TotalEnergies have each reshaped their Nigerian holdings in recent years to concentrate on deepwater resources that fiscal terms had previously made unattractive to develop.
Shell’s approval of Bonga North in 2024 marked the turning point, coming twenty years after the field was first discovered. ExxonMobil followed last week, sanctioning the $1 billion Usan Infill Project as part of a broader pledge to invest $10 billion in its Nigerian deepwater assets.
On its part, TotalEnergies has agreed to acquire Conoil’s 50% stake in the Egina South discovery, while Shell has taken a 10% stake in TotalEnergies’ OML 118 license to help move the Bonga Southwest-Aparo project forward. These moves are aimed at giving the majors tighter control over development timelines on assets they consider strategic.
Four projects to watch
Several other opportunities operated by Shell, Eni, ExxonMobil and TotalEnergies are advancing toward their own final investment decisions, and analysts say they represent the core of Nigeria’s near-term production and revenue outlook. The interesting part is that these projects are all greenfield, meaning yet to be unexplored territories in Nigeria’s oil sector.
The projects seen as most critical are Bonga Southwest-Aparo, operated by Shell, Owowo, operated by ExxonMobil, and Zabazaba and Etan, both operated by Eni. ExxonMobil has said a final investment decision on its Bosi field depends on progress at Owowo, while the gas-heavy Nnwa-Doro field, operated jointly by Shell and Chappal Energies, still has to clear high costs and a complicated ownership structure before it can move forward.
Wood Mackenzie estimates that if Bonga Southwest-Aparo, Owowo, Zabazaba, Etan, Preowei, Nnwa-Doro and Bosi are all developed alongside Bonga North and Usan, the projects together could add roughly 700,000 barrels a day of liquids and 950 million cubic feet a day of gas at peak output.
Given how ambitious Nigeria’s targets are, the firm’s analysts noted, “every barrel will count.”
Execution risk still looms
Meanwhile, analysts caution that sanctioning a project is only the first hurdle. Partner alignment, competition for capital, unitization of shared reservoirs, regulatory approvals, gas sales agreements and constraints in the offshore supply chain could all slow progress even after a final investment decision is reached.
Spare capacity on existing floating production, storage and offloading vessels offers a lower cost route for some tieback projects, though aging infrastructure could complicate that path. Projects that require newly built vessels will face higher costs, longer construction timelines and greater execution risk.
The next 18 months are likely to be decisive. Whether Bonga Southwest-Aparo, Zabazaba and Preowei advance to final investment decision in that window will determine whether Nigeria’s deepwater resurgence, still in its early stages, becomes a durable turnaround or just another false start for a sector that has disappointed before.
As Wood Mackenzie put it, if those projects get over the line, Nigeria’s deepwater comeback “will prove it has real bite.”
