By Okafor Joseph Afam | December 17, 2024

Shell Nigeria Exploration and Production Company Limited (SNEPCo), a subsidiary of Shell Plc, has reignited optimism surrounding its planned asset divestment in Nigeria following its recent $5 billion Final Investment Decision (FID) on the Bonga North project.

In a statement on Monday, Shell revealed that production from the Bonga North development is expected to peak at approximately 110,000 barrels of oil per day (bpd), with over 300 million barrels of oil equivalent recoverable. First oil is projected by the end of the decade, marking a significant milestone for Nigeria’s upstream oil and gas sector.

The multi-billion-dollar deepwater project—the first 110,000 bpd FID since the Egina field’s approval in 2013—has been hailed as a major step in unlocking the value of Shell’s Nigerian assets while ensuring a seamless transition for new ownership.

Subsea Tie-Back to Bonga FPSO

Welligence Energy Analytics, a leading global intelligence firm, described the project as a subsea tie-back to the existing Bonga Floating Production Storage and Offloading (FPSO) facility. The Bonga FPSO, currently operating at under 60% capacity, will benefit from the additional production boost.

“This is Nigeria’s first deepwater FID in over a decade, following recent deepwater capital incentives. Other stalled deepwater projects, such as Preowei and Owowo, could soon advance,” Welligence said in a note.

The sanctioned project involves drilling and completion of 16 wells—8 for production and 8 for water injection—along with upgrades to the Bonga Main FPSO and the installation of new subsea infrastructure to accommodate the tie-back.

Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director, remarked: “This is another significant investment, helping maintain stable production from our advantaged upstream portfolio.”

Government Support and Policy Impact

President Bola Tinubu welcomed Shell’s FID, attributing the development to his administration’s proactive policies and reforms.

“This landmark development—the first deepwater venture in over a decade—reflects investor confidence in Nigeria’s energy sector reforms,” said Tinubu’s Special Adviser on Information and Strategy, Bayo Onanuga.

Olu Verheijen, Tinubu’s Special Adviser on Energy, noted that the FID signals growing momentum in Nigeria’s oil and gas sector. “With this and the Ubeta FID earlier in 2024, we anticipate further investments in 2025 that will transform power generation, transportation, and manufacturing,” Verheijen said.

Boost to Nigeria’s Energy Sector

Bonga North, located within the OML 118 licence at depths exceeding 1,000m, is expected to enhance Nigeria’s production capacity significantly. Shell operates the project with a 55% stake under a production-sharing contract alongside NNPC (state-owned), ExxonMobil (20%), TotalEnergies (12.5%), and Italy’s Eni (12.5%).

The project builds on Shell’s legacy FPSO operations. Since its launch in 2005, the Bonga facility has been pivotal, averaging 120,000 bpd in 2024. Output surged to 135,000 bpd in November, according to the Nigeria Upstream Petroleum Regulatory Commission (NURPC).

Shell noted that while the FPSO requires some modifications for Bonga North, a broader life-extension program is underway to ensure it operates well beyond its original 2025 design.

Divestment and Future Prospects

Shell’s FID on Bonga North comes as the company progresses with plans to divest its Nigerian onshore business to Renaissance, a consortium of five largely Nigerian firms. Regulatory delays have slowed the transaction, but analysts view Shell’s commitment to Bonga North as a positive indicator.

“The FID sends a strong message of Shell’s confidence in the Nigerian market and its ongoing divestment deal,” said Dolapo Akinola, an energy analyst in Lagos.

Shell’s strategy aligns with its global shift toward cleaner energy sources and high-margin offshore developments. Potential buyers for its Nigerian assets include local oil companies and international players seeking to expand in Africa’s energy-rich regions.

The Road Ahead

The Bonga North project, with its significant resource potential and advanced infrastructure, is poised to reshape Nigeria’s energy landscape. Alongside planned developments like Bonga South West, which will feature its own FPSO and peak at 150,000 bpd by 2031, Shell’s investments may pave the way for a sustainable, investor-friendly energy sector.

As Nigeria celebrates this historic FID, stakeholders remain hopeful that these developments will unlock broader economic growth, solidify Nigeria’s position as Africa’s energy leader, and catalyze future investments in the oil and gas industry.