This article first appeared on GuruFocus.
Shell Plc (NYSE:SHEL) is in discussions with partners over the potential development of the Bonga South West oil field offshore Nigeria, a project that could involve around $20 billion of investment if it advances to a final investment decision. Following engagements with Nigeria’s President Bola Tinubu, Chief Executive Wael Sawan said the company is assessing the project as part of a broader review of upstream opportunities in the country. Sawan noted that changes in Nigeria’s investment climate over recent years have helped provide clearer visibility for Shell as it evaluates future capital commitments.
Bonga South West is located in deepwater in the Niger Delta and is estimated to contain about 820 million barrels of reserves, with a potential peak production capacity of roughly 220,000 barrels per day. Sawan said that, if sanctioned, around half of the estimated $20 billion spending would be capital investment, while the remainder would consist of operating and other expenditures flowing into Nigeria. Shell holds the largest stake in the project, alongside partners ExxonMobil, TotalEnergies, Eni and state-owned Nigerian National Petroleum Co., with the project currently at a pre-FID stage as partners work toward possible next steps.
The potential development comes as major oil companies continue to emphasize capital discipline amid relatively subdued oil prices, even as longer-term supply dynamics appear less certain. Shell said it intends to invest in its upstream portfolio in a disciplined manner where appropriate opportunities arise, with Sawan indicating that recently approved incentives have provided line of sight toward moving the project through pre-FID in the coming months. The discussions also follow Shell’s ongoing portfolio simplification, including its planned exit from Nigeria’s onshore production business, despite the company having paid $5.34 billion in taxes and other charges to the country in 2024, more than to any other jurisdiction.