ExxonMobil’s $10bn Deepwater Investment to Unlock 180,000 Barrels per Day in Nigeria
ExxonMobil’s Deepwater Investment
ExxonMobil, one of the world’s largest international oil companies (IOCs), has announced a $10 billion investment in deepwater oil projects in Nigeria. This substantial investment is expected to unlock a production capacity of 180,000 barrels per day (bpd) from the Owowo deepwater oil field, located in the oil-rich Niger Delta. The decision aligns with the company’s strategy to shift from onshore operations to deepwater ventures, seeking better returns in Africa’s biggest oil-producing country.
The investment will focus on several deepwater assets, including key oil blocks such as OML 133 (Erha FPSO), OML 138 (Usan FPSO), OML 139, and OML 154, where the Owowo field is located. These oil blocks represent a critical part of ExxonMobil’s future strategy in Nigeria’s energy sector.
The Owowo Deepwater Project
ExxonMobil’s focus on the Owowo field, discovered in October 2016, represents a significant step in its deepwater strategy. The Owowo project, which involves ExxonMobil affiliate Esso Exploration and Production Nigeria (Deepwater Ventures) Limited, is estimated to hold between 500 million and 1 billion barrels of recoverable oil. The project is part of a broader strategy to expand Nigeria’s deepwater oil production.
ExxonMobil holds a 27% stake in the project, serving as the operator, while the remaining interest is held by joint venture partners: Chevron Nigeria Deepwater G Limited (27%), Total E&P Nigeria Limited (18%), Nexen Petroleum Deepwater Nigeria Limited (18%), and the Nigerian Petroleum Development Company Limited (10%).
Negotiating Favorable Terms
ExxonMobil executives have been in discussions with the Nigerian government to secure favorable fiscal terms to make the $10 billion investment feasible. The Petroleum Industry Act (PIA) and reforms in the Production Sharing Structure have played a pivotal role in enabling this investment. The PIA has improved the net present value (NPV) of the Owowo project by over 200%, increasing its NPV to $3.5 billion, according to an S&P Global report.
Shane Harris, ExxonMobil’s chairman and managing director in Nigeria, emphasized the company’s commitment to Nigeria despite challenges in the oil and gas sector. He highlighted ExxonMobil’s 70 years of operations in Nigeria, producing over 8 billion barrels of oil during this period. Harris further noted that the company is now refocusing its investments on deepwater opportunities.
Ongoing Tenders for Drilling and Exploration
In August 2023, ExxonMobil issued tenders for oil rigs to conduct drilling, completion, testing, and temporary abandonment work in the deepwater blocks OML 139 and OML 154. The water depths range from 600 to 1,800 meters, and the tender is set to run for three years, with an option for an additional two years. Another tender sought oil country tubular goods (OCTG) and services for these same blocks, reinforcing ExxonMobil’s commitment to advancing deepwater exploration and production in Nigeria.
The Role of the PIA in Unlocking Investment
The implementation of Nigeria’s Petroleum Industry Act (PIA) has been a game-changer for deepwater projects. Bala Wunti, group general manager of Nigerian Upstream Investment Services (NUIS), previously noted that the Owowo deepwater project, which had been put on hold, was revived thanks to the PIA and changes in the Production Sharing Structure. These reforms have attracted more investment into Nigeria’s deepwater sector by providing greater financial stability and incentives for investors.
Broader Impact on Nigeria’s Oil Sector
ExxonMobil’s decision to invest in deepwater operations signals a shift in Nigeria’s oil production strategy. The 180,000 barrels per day expected from Owowo will significantly boost Nigeria’s overall crude output. With declining production from onshore fields, deepwater operations are becoming increasingly critical for Nigeria’s future energy supply. ExxonMobil’s investment, alongside the changes brought by the PIA, could encourage other IOCs to increase their focus on deepwater exploration in Nigeria, potentially unlocking more resources in the Niger Delta.
Social Media Reactions:
- @OilNewsAfrica: “Big news! ExxonMobil’s $10bn investment in Nigeria’s deepwater projects to unlock 180,000 bpd. Game-changer for the oil industry!”
- @EnergyAnalystNG: “With the PIA in place, ExxonMobil’s deepwater project is set to bring 180,000 bpd to Nigeria’s oil output. Huge win for the industry!”
- @GreenOilAfrica: “ExxonMobil is investing big in Nigeria’s deepwater assets. The Owowo project could be a turning point for our energy sector.”
- @PetroWatchNG: “ExxonMobil is not backing down! $10bn to unlock 180,000 barrels per day in Nigeria’s deepwater region. Massive investment!”
- @EnergyUpdateNow: “With oil prices fluctuating, ExxonMobil’s $10bn deepwater project in Nigeria offers hope for increased production and revenue.”
- @NaijaOilFacts: “The Owowo deepwater project could bring 1 billion barrels of oil to Nigeria’s reserves. ExxonMobil’s investment is a major boost!”
- @NigerDeltaNow: “Exciting times for Nigeria’s oil sector. ExxonMobil’s investment in deepwater fields brings much-needed production capacity.”
- @InvestmentOutlook: “Deepwater oil projects are the future for Nigeria, and ExxonMobil’s $10bn investment proves it. Big opportunities ahead.
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