ExxonMobil has launched the $1 billion Usan Infill Project in Nigeria’s OML 138, marking the company’s first drilling campaign in the country since 2016. According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the project aims to utilize new infill wells to boost production from the existing Usan Floating Production, Storage and Offloading (FPSO) facility, with first oil expected within 18 months.
Why is the Usan Infill Project significant for Nigeria’s energy sector?
The project represents a shift in how international energy companies approach Nigerian assets. While many majors have exited shallow-water and onshore fields due to security concerns and crude theft, companies are increasingly focusing on deepwater projects. According to the NUPRC, these deepwater assets are viewed as more secure and commercially viable. The investment signals a renewed interest in Nigeria’s deepwater acreage, which has seen limited activity over the last decade.
The Usan Infill Project does not involve building a new oilfield from scratch. Instead, it targets additional reserves around existing infrastructure. This strategy significantly lowers costs and accelerates the timeline for bringing new oil to market.
How does this investment align with the Petroleum Industry Act?
Government officials view the $1 billion commitment as a direct result of reforms introduced under the Petroleum Industry Act (PIA). Oritsemyiwa Eyesan, Chief Executive of the NUPRC, stated that the initiative aligns with the commission’s goal to revitalize deepwater activity.
Project Partners and Technical Execution
The project is a collaborative effort under a production-sharing contract with the NNPC Ltd. According to ExxonMobil, the investment is funded by a consortium including:
- Esso Exploration and Production Nigeria (Offshore East) Limited
- Chevron
- TotalEnergies
- Nexen (a subsidiary of CNOOC)
The decision to drill follows high-quality seismic data processing completed in 2024, which identified specific drilling opportunities within the field, according to company statements provided at NOG Energy Week.
What challenges remain for Nigerian crude production?
Despite the optimism surrounding the Usan project, Nigeria continues to struggle with historical production hurdles. As noted by the NUPRC, the country has faced difficulties in meeting output targets due to pipeline vandalism, aging infrastructure, and delays in investment decisions.
When analyzing oil sector trends, focus on the distinction between “infill” projects and “greenfield” developments. Infill projects, like Usan, are generally lower-risk because they leverage existing FPSO facilities and subsea pipelines, making them a preferred choice for majors looking to maintain output in volatile regions.
Frequently Asked Questions
What is the primary goal of the Usan Infill Project?
The project aims to unlock 40,000 barrels of oil by drilling new infill wells to maximize the capacity of existing deepwater infrastructure in OML 138.
Why did ExxonMobil wait since 2016 to resume drilling in Nigeria?
While the company did not specify the reasons for the long hiatus, the industry at large has cited regulatory uncertainty, security risks, and aging infrastructure as primary factors for the decade-long slowdown in upstream investment.
How does the Nigerian government support this investment?
The government, through the NUPRC and NNPC Ltd., has implemented the Petroleum Industry Act (PIA) to create a more attractive regulatory environment.
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