American energy corporation ExxonMobil, alongside its joint venture partners, is preparing to make Final Investment Decisions (FIDs) on several substantial deep-water projects in Nigeria. These initiatives are collectively estimated to be worth approximately $10 billion.
The initial phase of this investment drive is expected to focus on an infill drilling campaign within the existing Usan deep-water asset, a project estimated to cost over $1 billion. ExxonMobil has already committed 30 per cent to this venture and anticipates declaring investment readiness in the coming months.
With multiple projects planned, ExxonMobil has set an ambitious goal to expand its crude oil output in Nigeria from its current level of 100,000 barrels per day (bpd) to 250,000 bpd over the next five years.
Mr. Jagir Baxi, Chairman and Managing Director of ExxonMobil's Nigerian affiliate, revealed these plans during a recent interview in Lagos. His remarks followed the celebration of 20 years of continuous oil production by Esso Exploration and Production Nigerian Limited (EEPNL), Exxon's operating arm in Nigeria, at the Erha oil producing asset.
This development aligns with ExxonMobil's September 2024 announcement to Nigerian Vice President Kashim Shettima in New York, where the company detailed its intention to invest $10 billion in Nigerian deep-water oil projects, with the expectation of unlocking at least 180,000 bpd.
A cornerstone of this planned investment is the Owowo deep-water asset, which reportedly holds between 500 million and one billion barrels of oil reserves. Its development would involve a tie-back to ExxonMobil's nearby Usan Floating Production, Storage and Offloading (FPSO) facility.
ExxonMobil holds a 27 per cent operating interest in the Owowo asset. Its Joint Venture partners include Chevron Nigeria Limited (27 per cent), TotalEnergies E&P; Nigeria Limited (18 per cent), Nexen Petroleum Deepwater Nigeria Limited (18 per cent), and the Nigerian National Petroleum Company Limited (NNPC) (10 per cent).
Providing further details, Baxi explained that ExxonMobil is initiating an infill drilling campaign in the Usan field to extract additional resources, as indicated by recent seismic survey results. While part of the original Usan reservoir, this project will necessitate new infrastructure, wells, and subsea connections, leveraging the existing Usan FPSO.
"Based on the seismic result, it became clear that there is resource, it’s material, it’s valuable, it can be produced with relative speed, different from a brand-new greenfield FID," Baxi stated. "We do plan to declare the investment ready in a short while."
Baxi added that the company has been collaborating with all stakeholders, including the concessionaire NNPC Ltd, partners in OML 138, and regulators such as the Nigerian Content Development and Monitoring Board (NCDMB) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), to meet all necessary requirements for the FID.
The Usan infill drilling program is valued at approximately $1 billion, with ExxonMobil having already allocated about 30 per cent for early-stage work and foundational contracts.
"And we are closing in on the point where all the important execution enablers will be clear and in place, and provide us the basis to declare that investment as ready to go," Baxi commented. "It will provide new production from deep-water in the near term. Within months of the campaign starting, we’ll be able to produce from this investment. The investment runs through almost all next year as a total campaign. It’s worth about one billion dollars in total, and we have already committed around 30 per cent of that in the early works, the early long-lead equipment and in the foundational contracts.
"That’s about the time a typical large investment would reach FID readiness. So, we’ll cross that gate or that milestone very soon."
Regarding the Owowo asset, Baxi indicated that its full development would require an investment ranging from $7 billion to $8 billion.
"You should think about Owowo at the seven to eight-billion-dollar range plus," he said.
Baxi characterized Owowo as a pivotal project, being rapidly advanced as the leading investment following the Usan infill drilling.
He elaborated that in a full development scenario, Owowo could involve 20 to 40 wells, surpassing the number of wells for the Erha and Bonga tie-backs, which typically range from 10 to 15 wells. The Owowo asset is located over 30 kilometers away, compared to the single kilometer distance for those tie- backs.
In terms of well count, Baxi suggested that Owowo would be at least twice the size of Bonga North, another significant deep-water oil asset operated by Shell Nigeria Petroleum Company Limited (SNEPCo), currently under development with an investment of $5 billion.
"Resource size, you can characterise Owowo as at least 50 per cent or more, larger than either the Erha North tieback or the Bonga North tieback to Bonga," the ExxonMobil chair explained. "It’s a truly big field, but its geography is spread more than Erha or Bonga today are.
"So, these are some of the characteristics of complexity that I would share as ways that we can describe and help you understand the progression of the investments to date, the tiebacks that are occurring.
"And so, I come back to Usan at one billion dollars. Bonga North at five billion dollars. We’re now in the eight plus range as a measure of the complexity and step up. So, the sense of urgency of timing to announce, I share that with you and with the stakeholders."
While Baxi did not provide a specific timeline for the FID on the Owowo development or the Usan infill drilling program, he confirmed that the necessary planning and evaluations were nearing completion.
"And what I hope we’ll be able to be more open about with stakeholders, like you and others, is when we can point to the formative announcements or formative agreements like long lead procurement, like establishing shore base capability to support that," he stated.
"These will be the visible early signals before FID, just like we did with Usan field. So, there’s a lot that occurs today that are within the stakeholder groups enabling the presidential inspiration. Each of those will reach a milestone that will underpin more visible commitments.
"That’s the journey we’re on. So, when we make an FID announcement, we do it with the partners clearly aligned with us, the stakeholders clearly aligned. It’s a signal to go.
"We’re not interested in making an announcement that looks like we want to go. That’s not the ExxonMobil way. We want certainty, we’ll work for certainty, and we’ll commit to what we say we will do as operator and move to it.
"That’s the reputation we want to continue to live by. It’s clarity of our intent, and then we will do what we say."
Baxi projected that within five years, ExxonMobil, through Esso, would achieve a total production of 250,000 bpd in Nigeria, an increase from the current 100,000 bpd, and also produce 100 million standard cubic feet per day (mmscf/d) of natural gas.
He explained that both the infill drilling campaigns in Usan and Erha, and the development of the larger Owowo field, are expected to unlock a combined 160,000 bpd of oil production and approximately 100 mmscf/d of gas.
The brownfield projects at Usan and Erha are anticipated to yield an additional 40,000 bpd and 20,000 bpd, respectively. Meanwhile, the greenfield Owowo project is projected to deliver 100,000 bpd of oil and 100 mmscf/d of gas.
"So, to your question if we can see a future of 250,000 or 200,000 barrels, yes, it is definitely a possibility as we put these investment pieces together," Baxi affirmed.
"We are motivated to try and do more than that, actually. I mentioned Owowo project comes with an expectation of a gas pipeline that can unlock gas from Owowo and Usan to shore. So, 250,000 barrels liquids, we’d like to be able to get to 100 million cubic feet of gas per day also, from Owowo, underpinned by Owowo especially. And so, the horizon has that kind of possibility. There is gas there."
He commended the current government for establishing a supportive fiscal environment that encourages new investments in Nigeria's deep-water oil and gas sector.
Baxi noted that ExxonMobil and its partners have been actively engaged and inspired by the administration's policy announcements throughout 2024.
Referencing Presidential Executive Directives 40, 41, and 42, Baxi highlighted them as key incentives concerning national content and contracting.
He added that since the conclusion of their divestment, the focus has been on translating these directives into specific project outcomes.
Baxi stated, "You’ve heard me say this before, I believe the project-specific enablers required to be defined from those directives. So, for example, national content directive translates to an Owowo-specific national content strategy. The contracting and efficient cycle time of contracting translates to an Owowo contracting strategy. And the incentive structure translates to an Owowo incentive analysis. That’s been the work since our divestment concluded."
By Peter Uzoho
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