Sopuruchi Onwuka

American oil multinational major, ExxonMobil, appears to have activated a tranquil plan to mount production pressure on its deepwater assets in Nigeria as it lays out investment capital for greenfield developments and enhanced recovery programmes for brownfield assets.

The company which just emerged from the courts after a protracted battle with the national oil company received massive presidential compliments when it announced intention to invest $1.5 billion in enhanced oil recovery at operated deepwater assets.

The announcements strongly inferred that it is actually not repatriating the $1.3 billion it recovered from divested bronwfield assets in the conventional offshore where it yielded commercial stakes and operating interest to Seplat Energy PLc.

The new investment proposal also justifies the intervention of the president’s office and cronies in simultaneously assisting in closing the divestment deal and also enabling further investment in the government’s aspiration for oil production boost and linked foreign exchange revenue inflow.

Nigerian Upstream Petroleum Regulatory Commission (NUPRC) stated that ExxonMobil would now arrest declining production at the deepwater Usan field which was developed and commissioned by TotalEnergies in 2012.

The enhanced oil recovery programme, according to Chairman and Managing Director of ExxonMobil affiliates in Nigeria, Shane Harris, would be in addition to other field development investments that include the Owowo and Erha fields.

The Commission Chief Executive (CCE), Engr Gbenga Komolafe, once seen as an obstacle to ExxeonMobil, showered the American firm with compliments and pointed out that the investments align with government’s ambition to boost Nigeria’s crude oil production by one million barrels per day to 2.4 million barrels per day by next year.

Emerging from a protracted $1.3 billion divestment deal with Seplat Energy Plc, ExxonMobil appear to redeploy the cash recovery for intensified production from the deepwater where it operates a number of production sharing agreements with the NNPC Limited.

The Oracle Today reports that the American oil behemoth, which gave up its stakes in operated joint venture with the Nigerian National Petroleum Company (NNPC) Limited in the conventional terrains, is now accelerating recovery of its commercial investments and associated margins from discovered deepwater reserves.

ExxonMobil had earlier indicated intention for $10 billion development programme in Nigeria’s deepwater in a bid to tap into reserves at some 180,000 barrels of liquids per day from the billion barrel Owowo discovery.

The company holds operating rights in over five deep-water assets in Nigeria, including the Erha field currently producing with the Erha FPSO hosted in Oil Mining Lease (OML) 133), the Usan field producing in OML 138, and the straddled Owowo discovery OML 139 and OML 154.

The venture into development of Owowo currently appears pressing following rapid decline of production at the company’s operated assets and the urgent need accelerate output through a combination of Greenfield development and enhanced oil recovery programmes at operated brownfields.

Currently, output from the company’s Nigerian operations has taken a nosedive, with volumes plunging to about 120,000 barrels per day; less than the volume expected from a standard deepwater field.

To boost output, ExxonMobil has been in discussion over development of Owowo field with the NNPC Limited and TotalEnergies which has proved a longstanding partner that developed the Usan field currently operated by Esso. TotalEnergies also holds a claim to part of the Owowo reserves which straddles across two oil blocks operated by both companies respectively.

With a development budget of princely $10 billion, ExxonMobil’s  Esso Exploration and Production Nigeria (Deepwater Ventures) Limited, is working to bring the billion barrel Owowo field to production using a floater with proposed nameplate output capacity of 180,000 barrels per day. The development is currently back in view after about nine years of discovery in October 2016.

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).

Official sources hint that government is working on deepwater development models that would optimize existing infrastructure and facilities, including tie-back of new production to exiting floating production, storage and offloading (FPSO) vessels at contiguous Bonga, Usan, Akpo and Egina fields. However, new developments with significant output might require separate stand alone floaters.

For Owowo development, The Oracle Today learnt that partners are under pressure to consider a tie –back to the Usan FPSO which is currently underutilized as production at the field has dropped to less than 50,000 barrels per day.

Mr Harris stated that the company is working to secure favorable fiscal arrangements that justify deepwater development investments.

He restated the company’s commitment to sustainable operations in the country, adding that the MPNU divestment would only enable ExxonMobil refocus on deep-water opportunities in Nigeria.

Conclusion of ExxonMobil’s divestment from its conventional offshore stakes in Nigeria followed the intervention of President Bola Tinubu whose tentacles in the upstream petroleum industry have now grown to become key deal brokers in the economy after the 2023 federal elections. 

And it appears that the executives of either ExxonMobil or Seplat navigated into the right track at the right time in order to push the transaction through official roadblocks.

Whichever way, it is certain in the industry that the role of the president pulled down the objection hands of the NNPC Limited which claimed right of first refusal in acquiring the MPNU assets, and also guided the decisions of the NUPRC which earlier killed the deal in support of NNPC.

President Tinubu had assured the president of ExxonMobil, Liam Mallon, that his administration of the federal government was dedicated to close the divestment issues. And his intervention is credited with pushing the divestment through, leaving the American oil company drifting deeper offshore for enhanced production.

Thus, both the presidency and ExxonMobil share the glory of attracting investments that would contribute in realizing the government’s mandate on the industry to boost oil production in the immediate to medium term by attracting and domiciling the required capital for exploration and production.

While the plaudits continue to pour in, discerning industry pundits view the investment outlay from a different window, noting that the big American firm which did not participate in the recent bid rounds for deepwater oil blocks in the country might be working more to glean out further commercial returns than to appeal to Nigeria’s industry motives.

An eminent industry leader and respected investor told The Oracle Today that the American oil major is still displaying the character of oil giants when they are in preparation to leave a business environment behind. He noted that ExxonMobil might be putting some cash on the table to squeeze as much oil as possible before leaving the country.

“No oil major stays behind when production depletes to marginal levels. And that is what is beginning to happen in the deepwater. So, what you will see going forward is accelerated development of existing discoveries without new exploration. And if that is indicated, then be sure it won’t be too long to say goodbye,” our source explained.