Nigeria: Shell’s $5bn Bonga North Deep-Water Investment Excites Tinubu
·President describes feat as milestone for nation’s energy sector
President Bola Tinubu yesterday welcomed Shell and its four partners’ namely the Nigerian National Petroleum Company Limited (NNPCL), ExxonMobil, TotalEnergies, and Eni’s announcement of a Final Investment Decision (FID) on the Bonga North Deep Offshore Field.
According to the President, the landmark development, Nigeria’s first deep-water oil project in over a decade, underscored the transformative impact of his policies and reforms in attracting investments in the oil and gas sector.
The Bonga North oilfield, located 130 kilometres offshore in Oil Mining Lease (OML) 118, represents an impressive estimated $5 billion investment and is expected to yield approximately 350 million barrels of crude oil.
Shell holds the largest operational interest, with 55 percent and operates the Bongafield in partnership with Esso Exploration and Production Nigeria Ltd. (20 percent), Nigerian Agip Exploration Ltd. (12.5 percent), and TotalEnergies Exploration and Production Nigeria Ltd. (12.5 percent), on behalf of the NNPC.
According to a statement issued by the Special Adviser to the President on Information and Strategy, Bayo Onanuga, the FID signals renewed confidence in Nigeria’s energy sector and demonstrates the effectiveness of the Tinubuadministration’s strategic focus on engendering a robust and competitive investment climate.
The President in his remarks said: “The Renewed Hope Agenda fundamentally focuses on attracting investments to transform the Nigerian economy and deliver prosperity to our people.
“We designed our policies and reforms from the start of my administration to achieve this goal. Shell and its partners’ decision to invest in Bonga North affirms the success of our efforts. We will continue to offer the necessary support to ensure their success and the realisation of Nigeria’s energy potential.”
Tinubu’s strategic engagement with global energy stakeholders had been instrumental in this renewed wave of investments.
In July 2023, at the first of several high-level meetings with Shell’s global leadership, President Tinubu had declared, “We are open for business and serious about creating a stable, predictable, and investor-friendly environment.”
Presidential Directives issued in early 2024 had reinforced this commitment by fast-tracking regulatory approvals, reducing operational costs, and introducing competitive fiscal incentives.
The Bonga North project is the second of the blueprint projects President Tinubuselected to drive the implementation of the transformative Presidential Directives 40, 41, and 42 issued in the first quarter of 2024.
These directives, which aim to enhance regulatory clarity, accelerate project timelines, and incentivise investment in Nigeria’s energy sector, have yielded remarkable results.
Earlier this year, the Ubeta oilfield (OML 58), the first blueprint project under this initiative, achieved a FID through a partnership between TotalEnergies and NNPC Limited.
Dormant since its discovery in 1965, the Ubeta project would produce 350 million standard cubic feet of gas per day, bolstering domestic supply and expanding Nigeria’s presence in the global energy market.
With both blueprint projects now achieving FID, the success of these initiatives underscores the effectiveness of the President’s strategic vision for Nigeria’s energy future.
Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, welcomed the announcement, stressing that it was a sign that Nigeria’s business environment remains very attractive to investors.
Reacting to the development, Lokpobiri, in a statement by his Special Adviser on Media, Nneamaka Okafor, noted that the announcement aligns with the federal government’s commitment to revamping Nigeria’s oil and gas sector through strategic reforms and investments.
“This announcement by Shell is a clear indication that our policies are working. It underscores the confidence investors have in the reforms and enabling environment being fostered under President Bola Tinubu’s administration.
“This project is expected to add 110,000 barrels per day to Nigeria’s production capacity, creating significant economic value for the nation,” he added.
The minister had consistently assured Nigerians that major investment announcements would be made before the end of the year.
The Shell FID is one of several anticipated investments, as Lokpobiri reiterated the government’s commitment to providing the enabling environment for businesses to thrive.
“This is just one of many investments we are expecting. The federal government remains steadfast in addressing investor concerns, improving regulatory frameworks, and ensuring that the oil and gas sector continues to attract global players.
“Our goal is to use such investments to drive economic growth, create jobs, and improve the standard of living for Nigerians,” the minister added.
Lokpobiri commended Shell for its confidence in Nigeria and assured the company of the government’s support in ensuring the project’s success.
Besides, he emphasised that more initiatives were underway to sustain the momentum in attracting investments into the oil sector.
For her part, the Special Adviser to the President on Energy, Ms. Olu ArowoloVerheijen, was quoted to have said: “The Bonga North FID dispels the misconceptions about International Oil Companies leaving Nigeria. Instead, we are witnessing a strategic pivot of IOCs-powered capital and technical capacity to deepwater and integrated gas projects, which align with President Tinubu’s vision of transforming Nigeria into a global energy hub.
“The divestments from onshore operations create opportunities for local oil and gas companies to expand and thrive, building a strong foundation for Nigeria’s energy future.”
Verheijen further noted: “The success of Bonga North and Ubeta demonstrates the efficacy of the reforms and directives championed by the President. These projects will trigger broader investments to revolutionise Nigeria’s power generation, transportation, and manufacturing sectors. As we look ahead to 2025, we anticipate further FIDs from international and domestic players, marking a new era of growth and opportunity for Nigeria.”
The statement further noted that the Tinubu’s administration remains steadfast in positioning Nigeria as a global leader in energy innovation and investment, ensuring that these efforts translate into tangible benefits for all Nigerians.
Meanwhile, Shell in a separate statement issued from London, yesterday expressed optimism that the asset would reach a peak production of 110,000 barrels of oil a day and that first oil was anticipated by the end of the decade.
The project, according to the statement, involves drilling, completing, and starting up 16 wells (8 production and 8 water injection wells), modifications to the existing Bonga Main FPSO and the installation of new subsea hardware tied back to the FPSO.
It multinational oil giant stated: “Bonga North currently has an estimated recoverable resource volume of more than 300 million barrels of oil equivalent (boe) and will reach a peak production of 110,000 barrels of oil a day, with first oil anticipated by the end of the decade.”
“This is another significant investment, which will help us to maintain stable liquids production from our advantaged Upstream portfolio,” Shell’s Integrated Gas and Upstream Director, Zoë Yujnovich, stated in the statement.
It maintained that the investment in Bonga North was expected to generate an internal rate of return (IRR) over the hurdle rate for Shell’s Upstream business.
Meanwhile, some industry players have expressed their excitement over the announcement of the landmark FID on Bonga North project.
Speaking to THISDAY, on the development, a former Chairman of the Petroleum Technology Association of Nigeria (PETAN) and Managing Director of CB Geophysical Solutions Limited, Mr. Bank-Anthony Okoroafor, called for similar FID to be taken on some other major upstream projects by ExxonMobil, TotalEnergiesamong others.
Okoroafor stated, “It’s a very positive development. And this is something that should have been taken many, many years back. So, it’s positive. And I hope they can do similar thing on some other major projects.
“You know, this one is Bonga. This one is Shell. Total has some other projects.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
ExxonMobil has some other projects, major projects.
“So, I’m looking at Ntokong, Owowo, and all those big projects. So, let’s be moving. We are getting very late for dinner. It’s taking years.”
He added that the project would create a lot of huge opportunities for many service companies in terms of engineering, equipment procurement, installations, commissioning, and service.
Similarly, Nigerian oil and gas contractors under the aegis of the the Petroleum Contractors Trade Section (PCTS), described Shell’s landmark Final Investment Decision (FID) on 300 million barrels Bonga North project as a testament to theresilience and potential of the country’s energy landscape.
Chairperson of PCTS, Rosario Osobase, in a statement exclusivity sent to THISDAY, yesterday, noted that, “The FID on Bonga North by Shell represents a landmark development for Nigeria’s oil and gas sector.
“For us at PCTS, an association committed to advocating for and fostering sustainable growth in the industry, this decision is a testament to the resilience and potential of the Nigerian energy landscape.”
She added that the project not only promises to boost production capacity but also demonstrates renewed confidence in the Nigerian oil and gas value chain.
“We are confident it will create significant opportunities for local contractors, deepen local content participation, and contribute to the broader economic development of the country.
“Having consistently advocated for increased activity in the oil and gas sector to enhance production, stabilise operations, and support economic growth, we see this decision as a clear indicator of the importance of collaboration.
“It highlights the need for sustained synergy among key stakeholders–government, oil companies, and service contractors–in driving the future of energy in Nigeria.
“We commend Shell for this bold step and remain optimistic about the positive ripple effects it will generate across the industry”, Osobasenoted.
