Nigeria’s Deepwater Comes Back to Life: Exxon’s $1 Billion Usan Push and a New Total Rig Put the Reforms to the Test
Nigeria’s upstream reforms are starting to show up in deepwater activity. ExxonMobil is advancing its $1 billion Usan infill development, and TotalEnergies has secured a drilling rig for a new offshore campaign, signs of returning investment in a sector hit by declining production, long project delays and contractual uncertainty.
ExxonMobil confirmed in October that Usan had entered field execution, targeting an additional 40,000 barrels per day (bpd) within 18 months. TotalEnergies said it planned to mobilize a deepwater rig by late October, with Managing Director Matthieu Bouyer saying a process that once took three years has been cut to nine months.
The turnaround is badly needed. Combined output from the country’s seven deepwater leases operated by international oil companies fell to 352,000 bpd in the first four months of 2026, down 20% year-on-year and half the level of 2020. TotalEnergies’ Egina, which reached first oil in 2018, remains the most recent major deepwater project to enter production.
Usan is being redeveloped through infill drilling, a route to extra output without the full cost of a standalone project. TotalEnergies is pursuing a similar push, preparing exploration at Akpo Far East, finalizing a deepwater production sharing contract (PSC) backed by the Nigerian National Petroleum Company, and moving the 150-million-barrel Preowei prospect toward front-end engineering and design.
Much of the pick-up is credited to efforts to settle long-running contract disputes. Jagir Baxi, managing director of ExxonMobil Nigeria, linked Usan to the resolution of legacy PSC disputes. “Without that, there is no new investment,” he said. The government’s 2024 executive orders cut contracting costs, tightened local content rules and sped up project delivery, and further fiscal incentives were meant to improve deepwater economics.
Fiscal uncertainty remains a hurdle. TotalEnergies is still negotiating with the Ministry of Finance to restore deepwater capital allowances that were altered under the new tax regime, changes Bouyer says conflict with incentives introduced by executive order. A 2025 report on Nigeria’s tax reforms by accounting firm PwC notes that such inconsistencies complicate project evaluation, particularly for capital-intensive deepwater developments where investors need predictable terms over long operating periods.
Interest is spreading beyond the majors. Meren Energy, a non-operating partner in several Nigerian deepwater assets, expects activity across its portfolio to resume from late 2026 or early 2027. “We see Nigeria as our key development opportunity right now,” said chief financial officer Aldo Perracini.
Whether the reforms deliver lasting results will depend on whether faster approvals and better operating conditions turn into sustained drilling, more investment decisions and higher production.
Source: prospect-intel.com
