ExxonMobil commits 30% of $1 billion Usan infill cost ahead of formal sanction

ExxonMobil has committed roughly $300 million, about 30 percent of the total cost, for its Usan infill development offshore Nigeria, positioning the project for a formal final investment decision even before the official sanction has been declared, the company’s top executive in the country said.

Jagir Baxi, chairman and managing director of Esso Exploration and Production Nigeria Limited, an ExxonMobil affiliate, told BusinessDay the early capital deployment covers foundational contracts, long-lead equipment procurement, and preparatory work on the $1 billion infill drilling program at Oil Mining Lease 138.

“We are closing in on the point where we will declare it formally investment-ready,” Baxi said.

The move signals growing conviction inside ExxonMobil that the Usan infill, which the company expects to unlock up to 40,000 barrels per day of additional flowing capacity, can clear the investment hurdle without requiring new surface infrastructure.

The program is designed as a tie-back to the existing Usan floating production, storage and offloading vessel, eliminating the need for a greenfield FPSO and significantly improving the project’s return profile.

The infrastructure logic is central to ExxonMobil’s pitch on the economics. Under Nigeria’s production sharing contract structure, capital expenditure is recovered by investors before the government’s full profit entitlement is realised.

A new FPSO would inflate the capital base, compressing the share of barrels available to the Nigerian state. By routing production through an existing vessel with spare capacity, the company argues it can bring more barrels into profit-sharing at an earlier point.

“Higher capex is not neutral; it actually reduces the proportion of barrels available to create broader value for Nigeria,” Baxi said, extending the same reasoning to the larger Owowo field development, which he pegged at $7 billion to $8 billion and similarly envisions as a subsea tie-back to the Usan FPSO.

Usan infill forms one piece of a stacked production growth case that ExxonMobil is assembling across its Nigerian deepwater portfolio. Combined with an Erha infill program estimated to deliver roughly 20,000 barrels per day, the two campaigns together could nearly double the company’s current operated output of just over 100,000 barrels per day, before accounting for Owowo, which at peak production could contribute more than 100,000 barrels per day on its own.

Baxi described the company’s plan to keep a single deepwater drilling rig deployed continuously across the Usan and Erha campaigns as both an efficiency strategy and an operational philosophy. Spreading fixed rig mobilisation costs over a longer continuous campaign lowers the per-well cost, while keeping the same crew on the same equipment drives the performance improvement that deepwater drilling demands.

“Think of a deepwater drilling crew the way you would think of a Formula One pit crew,” he said. “The more they drill, on the same rig, with the same technology stack and the same team, the faster and safer they become.”

The acceleration of early-stage spending comes as Nigeria’s government pushes toward production targets of between two and three million barrels per day, a level that would require both protecting existing output and bringing new capacity online fast enough to outrun natural field decline.

Baxi was direct about the stakes. “FID announcements that come slowly translate into capacity that arrives too late to offset decline curves that are moving against us every single day,” he said.