The decision of ExxonMobil to invest $1.5 billion in deepwater oil projects in Africa’s biggest oil-producing country is expected to unlock at least 510,000 barrels per day (bpd), BusinessDay’s findings have revealed.
Nigeria, which has struggled with declining oil output due to underinvestment, pipeline vandalism and regulatory uncertainties, sees this investment as a game-changer.
The country’s oil production has fallen below 1.4 million bpd in recent years, far short of its Organisation of the Petroleum Exporting Countries (OPEC)’s quota of 1.74 million bpd. The ExxonMobil deal could help reverse this trend, potentially increasing Nigeria’s total output by over 35 percent.
ExxonMobil anticipates reaching a final investment decision (FID) on the Usan project in the late third quarter (Q3) of 2025. This decision is contingent upon the approval of the Field Development Plan and the securing of necessary internal and partner funding.
During a meeting on Tuesday with Gbenga Komolafe, head of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Shane Harris, ExxonMobil’s managing director in Nigeria, stated that this $1.5 billion commitment would add to other planned investments to develop further deepwater assets, including the Owowo and the Erha fields.
The investment will focus on expanding operations in deepwater fields, particularly the Erha and Usan projects, as well as exploring new offshore blocks. ExxonMobil’s deepwater portfolio in Nigeria is one of its most profitable, benefiting from lower operational risks compared to onshore assets, which are often plagued by security challenges and community disputes.
Read also: ExxonMobil confirms plan to invest $1.5bn in Nigeria’s deepwater oil fields
Usan field (180,000 bpd)
Discovered in 2002, the Usan field lies around 100 kilometres off the South-East Nigerian coast in water depths ranging from 750 to 850 meters.
The Usan development comprises a spread moored Floating Production, Storage and Offloading (FPSO) vessel designed to process 180,000 barrels per day and with a crude storage capacity of two million barrels. Its size of 320 meters long and 61 meters wide position it as one of the largest vessels of this type in the world.
Development involves 42 wells that are connected to the FPSO by a 70-kilometre-long subsea network.
Owowo field (180,000 bpd)
The Owowo project may produce 180,000 bpd, with Exxon holding a 27 percent stake.
Obo Idornigie, vice president at Welligence, said partners in Owowo are planning to tie the field back to Usan FPSO, which is underutilised.
A note from S&P Global last year highlighted the impact of the PIA on deepwater projects, noting that the changes have increased Owowo’s net present value (NPV) by more than 200 percent to more than $3.5 billion.
Read also: FG eyes 4 million bpd by 2030 with fresh deepwater incentives
Erha field (150,000 bpd)
The Erha discovery was made in December 1999. Three appraisal wells were subsequently drilled, and two wells confirmed the presence of oil in Miocene turbidite sands.
The two fields are estimated to hold combined recoverable oil reserves of approximately 500 million barrels.
The Erha terminal is located within the Gulf of Guinea, offshore Nigeria at approximately 157.4km south-east of Lagos Port. The spread-moored Erha FPSO has a designed storage capacity of 2.2 million barrels of crude oil, and its designed oil processing capacity is 210,000 barrels per day (bpd). The FPSO’s water injection capacity is 150,000bpd, while its gas injection capacity is 340 million standard cubic feet per day (Mscfd).
The FPSO is 285m long, 63m wide and has accommodation facilities for 100 people. It is designed to operate for 25 years and is also equipped with a helideck.
Why ExxonMobil is looking offshore
Analysts suggest that ExxonMobil’s move could encourage other international oil companies (IOCS) to increase their Nigerian investments. Shell, TotalEnergies, and Eni have been reassessing their portfolios, with some scaling back onshore presence while expanding offshore.
“The idea is to make sure we build capacity, Nigerian capacity that can become global dominant players whether they are oil and gas operators or whether they are contractors. Now that we’ve enabled the IOCs to sell their onshore businesses so that they can focus on deep water, they have responded to the incentives,” Olu Verheijen, special adviser to president Bola Tinubu on energy, said in an interview with Africa’s Oil & Gas report.
In September 2024, ExxonMobil also announced plans to invest $10 billion in Nigeria’s deep-water oil operations.
Three months later, Seplat Energy completed the acquisition of Mobil Producing Nigeria Unlimited (MPNU) from ExxonMobil.
Verheijen added, “The conversations we’re going to have are, how quickly can we do that? Does it work? Do we move it up significantly? Can you fast-track with all of these incentives and are your costs competitive? Your project execution timeline, can it be brought into what global standards are? And is this an attractive opportunity for you within the time that we have these incentives, because these incentives aren’t there forever?”
