Shell greenlights $2bn offshore gas project to bolster Nigeria’s LNG ambitions

Shell Nigeria Exploration and Production Company Limited (SNEPCo), a subsidiary of Shell plc, has approved a final investment decision (FID) on the $2 billion HI gas project offshore Nigeria, marking another major step in the Anglo-Dutch energy group’s efforts to expand its gas portfolio and reinforce its long-standing presence in Africa’s biggest oil producer.

The project, developed in partnership with Nigeria’s Sunlink Energies and Resources Limited, will deliver 350 million standard cubic feet of gas per day, equivalent to around 60,000 barrels of oil equivalent, at peak production.

The gas will supply Nigeria LNG (NLNG), in which Shell holds a 25.6 percent stake, and is expected to underpin exports of liquefied natural gas to global markets from the Bonny Island terminal.

Production from the HI field, located roughly 50 kilometres offshore in about 100 metres of water, is scheduled to begin before the end of this decade. The field, discovered in 1985, holds an estimated 285 million barrels of oil equivalent (mmboe) in recoverable resources.

Peter Costello, Shell’s upstream president, said the decision underscored the company’s continued confidence in Nigeria’s energy future.

“Following recent investment decisions related to the Bonga deep-water development, today’s announcement demonstrates our continued commitment to Nigeria’s energy sector, with a focus on Deepwater and Integrated Gas,” Costello said. “This Upstream project will help Shell grow our leading Integrated Gas portfolio while supporting Nigeria’s plans to become a more significant player in the global LNG market.”

Since 2024, President Tinubu has issued targeted directives as part of the industry reform coordinated by the Office of the Special Adviser to the President on Energy, introducing unprecedented fiscal incentives, regulatory clarity, operating processes simplification, cutting contracting costs and reducing approvals cycle times. These reforms, now embedded in legislation, have restored investor confidence and repositioned Nigeria as a competitive destination for investments. The three landmark FIDs, the HI and Ubeta gas projects, and Bonga North deepwater, represent blueprint projects selected and unlocked by the Federal Government to drive the implementation of the presidential directives. Specifically, the development of the HI gas field—discovered four decades ago, in 1985—is being enabled by Presidential Directive 40, which introduced a competitive fiscal framework for Non-Associated Gas in onshore and shallow offshore fields. Olu Verheijen, special adviser to President Bola Tinubu on Energy, said: “With the Ubeta FID and now the HI FID, we have secured the gas supply needed to make NLNG Train 7 not just possible, but transformative. These projects will significantly strengthen the reliability of Nigeria’s LNG exports to global markets while expanding LPG supply for domestic use — reducing imports, boosting foreign exchange earnings, and advancing clean cooking access for millions of Nigerian households. And this is only the beginning; more FIDs are on the horizon, proving that with the right policies in place, investment and impact follow.”

Strengthening Nigeria’s LNG supply base

The HI project will feed gas into the NLNG Train 7 expansion, which aims to increase the Bonny Island plant’s annual liquefaction capacity from 22 million to about 30 million tonnes. The expansion is a central pillar in Nigeria’s strategy to expand LNG exports, attract foreign investment, and diversify its hydrocarbon revenues amid declining oil output.

Shell’s participation in the HI development aligns with its broader goal to boost its global LNG portfolio by an average of 4–5 per cent annually through 2030. The company views gas, particularly LNG, as a critical bridge fuel in the transition to lower-carbon energy sources. LNG emits about 40 per cent less carbon dioxide than coal when used in power generation and produces fewer emissions than petrol or diesel in transport applications.

The HI project’s infrastructure will include a wellhead platform with four wells, a subsea pipeline to transport multiphase gas to Bonny Island, and a new onshore gas processing facility. Processed gas will be delivered to NLNG, while condensates will be routed to the Bonny Oil and Gas Export Terminal.

Local partnership and economic ripple effects

Under the project’s joint venture structure, Sunlink Energies and Resources Limited holds a 60 per cent operating interest, while SNEPCo owns the remaining 40 per cent. Analysts view the collaboration as part of a broader trend of combining multinational expertise with local ownership in Nigeria’s oil and gas industry, in line with the government’s push for increased domestic participation.

Beyond supporting LNG exports, the HI project is expected to generate economic benefits through job creation in both construction and operations. Nigeria’s government has been eager to leverage such projects to drive local content development and mitigate the economic volatility tied to crude oil exports, which have been challenged by pipeline sabotage, theft, and underinvestment in recent years.

Industry observers say the project could also help stabilise Nigeria’s domestic gas supply at a time when the country faces chronic power shortages. “Developments like HI not only reinforce Nigeria’s position as an LNG exporter but also offer potential to alleviate domestic energy constraints, provided there’s a balance between export and local demand,” said a Lagos-based energy analyst.

Aligning with Shell’s growth strategy

The HI gas development contributes to Shell’s commitment, set out at its Capital Markets Day in 2025, to bring new upstream and integrated gas projects online between 2025 and 2030, with a combined peak production of more than 1 million barrels of oil equivalent per day. The company has pledged to grow production across its upstream and integrated gas businesses by about 1 per cent per year through the end of the decade.

The decision follows Shell’s FID on the Bonga North project in December 2024 and the recent increase in its equity in the main Bonga field—moves that reflect its strategy of disciplined reinvestment in Nigerian deepwater and gas assets despite divestments from onshore operations plagued by security challenges and environmental controversies.

Shell’s renewed focus on offshore and gas projects signals a shift toward lower-risk, lower-emission, and more commercially resilient investments in Nigeria, where the company has operated for over six decades. The emphasis on deepwater and LNG aligns with both Shell’s decarbonisation goals and Nigeria’s ambitions to become a global gas powerhouse.