ExxonMobil’s $10bn in Nigeria’s Deepwater Asset to Unlock 180,000 bpd
The decision of ExxonMobil to invest $10 billion in deep-water oil projects in Africa’s biggest oil-producing country is expected to unlock at least 180,000 barrels per day (bpd), BusinessDay’s findings have revealed.
ExxonMobil is one of the international oil companies (IOCs) which have exited Nigeria’s onshore environment to explore the deep-water operations in the oil-rich Niger Delta.
In recent public appearances, ExxonMobil executives in Nigeria have hinted at the progress made on several deep-water operations in Nigeria, including OML 133 (Erha FPSO), OML 138 (Usan FPSO), OML 139 and OML 154 (Owowo discovery) in the oil-rich Niger Delta, without giving any specifics.
Now, ExxonMobil’s new strategy in Nigeria will focus on the Owowo deep water asset, a sizable deep-water project drilled by ExxonMobil affiliate, Esso Exploration and Production Nigeria (Deepwater Ventures) Limited, estimated to cost $10 billion and unlock an estimated 180,000 bpd.
BusinessDay’s findings showed the deepwater asset discovered in October 2016 has a potential recoverable resource of between 500 million and 1 billion barrels of oil on the Owowo field offshore Nigeria.
“We’re working closely with the president’s office and the special adviser to the president to secure favourable fiscal arrangements that will make this significant investment possible,” said Shane Harris, chairman and managing director of ExxonMobil affiliates in Nigeria, as quoted by the press release from the presidency on Thursday.
“Our commitment to Nigeria remains unwavering. As we celebrate 70 years of oil production and 8 billion barrels produced, we’re not retreating but refocusing our investments on deep-water opportunities,” Harris was further quoted as saying.
Exxonmobil issued a tender in August 2023 seeking for oil rigs that will carry out drilling, completion, testing, temporary abandonment and workovers in water depths from 600 to 1,800 metres. It highlighted OML 139 and 154 in this tender, which closes on September 6, 2023. This will run for three years with an option for another two.
Another tender called for the provision of oil country tubular goods (OCTG) and services in the same licences and with the same duration. This OCTG tender closed on August 8 2023.
PIA changes
Bala Wunti, group general manager of Nigerian Upstream Investment Services (NUIS) of formerly National Petroleum Investment Management Services (NAPIMS), in July 2023, said the Owowo project, which Exxon has put in the freezer, has been unfreezed courtesy of the Petroleum Industry Act and changes in the Production Sharing Structure.
ExxonMobil holds 27 percent interest and is the operator for the Owowo project, while Joint venture partners include Chevron Nigeria Deepwater G Limited (27 percent interest), Total E&P Nigeria Limited (18 percent interest), Nexen Petroleum Deepwater Nigeria Limited (18 percent interest), and the Nigeria Petroleum Development Company Limited (10 percent interest).
A note from S&P Global last year highlighted the impact of the PIA on deepwater projects. The changes have increased Owowo’s net present value (NPV) by more than 200 percent, it said, to more than $3.5 billion.
Obo Idornigie, vice president at Welligence, an energy data intelligence firm, told Energy Voice that partners in Owowo were planning to tie the field back to Usan FPSO, which is underutilised.
He said NNPC records indicate that field development planning at Owowo would be completed with partners aiming for the Front-End Engineering Design (FEED) and contracting in 2024.
Idornigie added, “This is encouraging news, but projects like Bonga SW and Preowei have also had a number of false starts. Let’s hope Owowo can buck the trend.”
The Erha field is in OML 133, while Usan is in OML 138. Exxon’s Nigerian volumes have been declining over recent years. In 2020, production was 150,000 barrels per day of liquids. By 2023, this had fallen to 123,000 bpd.
Liam Mallon, president of ExxonMobil Upstream Company, was amongst the first executives to meet President Bola Tinubu after he took office in May. The meeting sent encouraging signs on the major’s commitment to Nigeria and the possibility of fresh investments being announced soon.
In June, the company appointed Shane Harris as its new chairman and managing director in Nigeria.
Divestment from Onshore
There is an ongoing plan with ExxonMobil and Seplat Energy for the divestment of the former’s onshore assets for $1.2 billion.
The deal, which has been ongoing since 2022, is anticipating some greenlight following President Bola Tinubu’s intervention in the issue.
Apart from Exxonmobil, Shell Plc reached an agreement in January to sell its Nigerian onshore oil assets to a local consortium for over $1.3 billion, pending government approval.
In addition to the initial sum, Shell anticipates receiving extra payments of up to $1.1 billion. The purchasing consortium, named Renaissance, comprises ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin.
Similarly, TotalEnergies stated plans to offload its minority stake in a significant Nigerian onshore oil joint venture following Shell’s divestment announcement.
