KEY POINTS

• ExxonMobil is investing $10 billion in Nigeria’s deepwater assets to unlock 180,000 barrels per day (bpd) of oil production.
• The project is seen as critical for Nigeria’s energy sector and economy, potentially boosting national revenues.
• ExxonMobil’s investment aligns with the global push for energy security and sustainable production.

The international oil giant ExxonMobil is set to invest $10 billion in Nigeria’s deep-water oil exploration, which is expected to produce an additional 180,000 bpd from Nigerian’s reserves. This investment comes as one of the biggest foreign investment in the Nigeria’s energy sector in the recent past and it would be for the benefit of both parties; ExxonMobil and Nigeria.

The decision, which comes at a time when the world is calling for energy security, will increase Nigeria’s oil production capacity at a time the nation is finding it hard to meet its OPEC production targets because of old facilities and operational issues.

To ExxonMobil, this is a good way of re-emphasizing on the company’s commitment on the exploration of deep water and importance of Nigeria to its operations.

Deepwater expansion to increase production

The investment is directed at the exploration and production of the deep water oil resources in Nigeria which has not been as active as the on-shore resources.

An attempt by ExxonMobil to increase its operation in the Nigeria’s offshore area is expected to unlock some of the most prospective unexplored resources that will boost overall production.

BusinessDay reported that ExxonMobil’s deep-water entity will be instrumental to the country’s effort to boost its daily oil production that has been below target for years due to factors such as inefficiencies, theft and lack of investment in the upstream sector.

The extra 180000 bpd could be a real boon to the nation, and provide a substantial boost to government revenues.

Economic and industry impact

The Nigerian economy has for several years relied on the exportation of oil to generate its major source of foreign exchange; Nigeria is the largest oil producing country in Africa.

However, in recent years it faced a lot of pressure to diversify its economy because of the volatile prices of oil and changing demand. The injection of $10 billion from ExxonMobil in the deep-water oil sector could not only boost the Nigeria’s oil earnings but also stimulate more FDI in Nigeria’s energy

It is also anticipated that this investment will generate employment and stimulate the growth of the supporting services in the oil and gas sector. It may also benefit Nigeria to meet the domestic demand since high production may reduce local supply gaps.

Synchronized with global energy profile

Deepwater field development is consistent with other global energy trends where the international oil companies are shifting their attention to deep-water and offshore prospects in an attempt to satisfy future energy requirements.

The production of deep-water oil fields that are often believed to be useful in higher rates of production is becoming more attractive from firms’ prospective to change the portfolio and ensure a sustainable supply of energy.

In addition, the deep-water resources in Nigeria are viewed as critical in the drive for energy security at a time the world is looking for sources other than oil from volatile areas.

Based on such trends, ExxonMobil’s action could be also seen as the concurrent effort to regulate the future oil production and include the new efficient technologies.

The company has been moving slowly to cleaner energy solutions and this project may include new technologies to minimize harm to the environment.

Oil sector in Nigeria: a new phase?

The $10 billion investment by ExxonMobil may be a harbinger of a new era for Nigeria’s oil industry, which has faced falling production and no investment in recent years.

There is also hope that with more production capacity expected to be added from this deep water project the sector might be revived.

The issues of governance and infrastructural development and security that have for many a long time formed the dark side to development.

While the process of achieving Nigeria’s vision as a leading oil producing country is not over yet, I agree with the company’s effort of channeling more of its resources in the country.

If more investment and commitment are put into the country by global energy stakeholders, Nigeria could well establish itself as one of the most productive oil producers in the world.