Shell Nigeria Exploration and Production Company Limited (SNEPCo), a subsidiary of the UK-based Shell, has made a final investment decision (FID) to proceed with the Bonga North deepwater oil and gas project off the Nigerian coast. The project will be developed as a subsea tie-back to the existing Floating Production, Storage, and Offloading (FPSO) unit, Bonga, located in OML 118.
The Bonga North investment is expected to generate a significant internal rate of return (IRR) that surpasses Shell’s target for its Upstream division. This move reflects Shell’s ongoing strategy to enhance performance through near-field developments, leveraging its technical expertise and strategic partnerships. The company’s approach focuses on simplifying operations and replicating successful models, with the Bonga North project serving as a key example.
Located at water depths exceeding 1,000 meters, the Bonga North project will be connected to the Shell-operated FPSO Bonga, which has been producing oil since 2005. The FPSO has a daily production capacity of 225,000 barrels and celebrated a major milestone in 2023, surpassing the one-billionth barrel of crude oil produced. The Bonga North project is estimated to represent a $5 billion development, according to the African Energy Council.
The Bonga North development will involve the drilling and completion of 16 wells, with half designated for oil production and the other half for water injection. The project also includes modifications to the FPSO Bonga Main and the installation of new subsea hardware. Akselos, a company specializing in digital twin technology, provided a structural model of the FPSO in 2020 to support the project’s design.
Shell anticipates that Bonga North will significantly contribute to its Integrated Gas and Upstream business, ensuring continued cash generation into the next decade. The project is expected to help sustain oil and gas production at the Bonga field, with an estimated 300 million barrels of oil equivalent (boe) in recoverable resources. Peak production is forecast at 110,000 barrels of oil per day, with first oil production expected by the end of the decade.
SNEPCo holds a 55% operating interest in the Bonga field, partnered with Esso Exploration and Production Nigeria (20%), Nigerian Agip Exploration (12.5%), and TotalEnergies Exploration and Production Nigeria (12.5%). The project is being developed on behalf of the Nigerian National Petroleum Company Limited (NNPC).
Zoë Yujnovich, Shell’s Director of Integrated Gas and Upstream, commented, “This is another significant investment that will help us maintain stable liquids production from our advantaged Upstream portfolio.”
The decision to move forward with the Bonga North development follows Shell’s announcement in January 2024 that it would divest its interest in the Shell Petroleum Development Company of Nigeria Limited (SPDC) joint venture, with a net book value of approximately $2.8 billion. This shift in focus is part of Shell’s broader strategy to prioritize deepwater and integrated gas businesses in Nigeria.