Nigeria’s oil industry is on the verge of a potential production rebound, as a new wave of offshore projects, backed by billions of barrels of untapped deepwater reserves, promises to add over 800,000 barrels per day (bpd) to national output.
For years, Nigeria’s oil output has been plagued by a mix of underinvestment, operational challenges and security issues in its onshore fields, causing production to plummet to 1.5 million barrels per day (bpd) as at July 2025 from a peak of 2.5 million bpd in the past decade.
The solution, according to industry experts and government officials, lies in the deep blue waters of the Gulf of Guinea, where billions of barrels of oil and trillions of cubic feet of gas, like Bonga North deepwater project, Akpo West project, Owowo field, and the Zababaza & Etan, remain locked away.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has been the key driver of this new strategy, championing a collaborative framework that encourages existing operators to pool resources and infrastructure to develop smaller, economically marginal fields that would otherwise be left fallow.
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The new model, dubbed ‘cluster development,’ is designed to optimise costs and accelerate project timelines. Rather than each company building its own standalone infrastructure, the approach allows new discoveries to be tied back to existing Floating Production, Storage, and Offloading (FPSO) vessels.
“Nigeria’s deepwater projects are crucial for reversing the country’s declining oil production,” Oliver Kapson, an energy analyst with the African Energy Council, said in a note.
The African Energy Council views the government’s push for a cluster development model as a pragmatic and efficient approach.
“By encouraging companies to share infrastructure, Nigeria can unlock billions of barrels of untapped reserves, attracting the necessary investment to meet its ambitious output targets and stabilise its economy,” said Kapson.
Specific projects
Several major projects are already underway, offering a clear roadmap to the 800,000 bpd target.
The Bonga North deepwater project, operated by Shell Nigeria Exploration and Production Company (SNEPCo), is one such example. This subsea tie-back project, connected to the existing Bonga FPSO, is projected to add an impressive 110,000 bpd to the nation’s output.
The project’s final investment decision (FID) was confirmed in December 2024, signalling a green light for its development.
Similarly, TotalEnergies is leading the Akpo West project, another effective tie-back initiative. The Akpo West field, a significant condensate discovery, is now being tied to the existing Akpo FPSO. With FID secured in February 2024, this project is set to deliver an additional 14,000 bpd of condensate, a valuable light crude that commands a premium in the market.
Beyond these tie-back projects, major standalone developments are also central to the strategy. The Owowo field, a deepwater discovery by Esso (a subsidiary of ExxonMobil), is poised to contribute a substantial 150,000 bpd. This project, which involves a tie-back to an existing ExxonMobil FPSO, is moving forward, with its development plan now having a positive FID status.
Perhaps the most significant new standalone project is Zababaza & Etan. Operated by Nigerian Agip Exploration (NAE), this large-scale deepwater development is envisioned as a major hub for future exploration activities.
While still awaiting its final investment decision (FID), the project has the potential to unlock a massive 150,000 bpd, representing a long-term investment in Nigeria’s deepwater sector and serving as a beacon for future exploration efforts.
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The cluster development strategy also has its sights set on even larger future projects. The Bonga South West/Aparo field is a prime target. This colossal deepwater field requires a joint agreement between Shell and Chevron to move forward, but its potential is enormous, with a projected production capacity of 190,000 bpd.
An FID for this project is expected by 2027, and its development could be a game-changer for Nigeria’s long-term production outlook.
Another promising cluster is the Doro/Sehki/Nsiko/Bolia group. This initiative perfectly embodies the NUPRC’s collaborative strategy, bringing together different companies like Chevron, Shell, and Allied Energies to jointly develop a cluster of fields.
With a collective potential of 135,000 bpd, this project, while awaiting FID, demonstrates the power of partnership in unlocking previously uneconomical reserves.
Nigeria, others begin new offshore projects
A report by Upstream Online, an international energy industry website quoting two global offshore drilling giants, Transocean and Valaris, said Nigeria, Ivory Coast, and Mozambique are on course to commence at least 10 new offshore drilling projects between 2026 and 2027, marking a major push in Africa’s deep-water oil and gas development.
Transocean and Valaris are both prominent global offshore drilling contractors. They compete for contracts to provide drilling services for oil and gas exploration and production.
According to the companies, the three African nations are emerging as strategic hotspots for future ‘floater’ opportunities, driven by growing interest from international oil companies in long-term deepwater operations spanning western, southern, and eastern Africa.
The report read, “Africa is at last starting to generate the opportunity set that the global deepwater drilling contractors have been waiting for.
“In their latest earnings calls, both companies said that expectations are high for drillship and semi-submersible requirements in West, South, and East Africa.
“Offshore Africa remains the most active area for future floater opportunities. We are currently tracking approximately 10 long-term programs with expected start dates in 2026 or 2027, including projects offshore Nigeria, Ivory Coast, and Mozambique,” said Matt Lyne, Valaris’ senior chief commercial officer, Matt Lyne.
The push, analysts say, underscores renewed global confidence in Africa’s offshore basins, despite long-standing challenges such as high capital costs and complex engineering requirements associated with deepwater exploration.
Recently, Shell Nigeria Exploration and Production Company Limited expressed its confidence in Nigeria’s ability to meet its production target of over 2.4 million barrels per day, with deepwater drilling playing a key role.
Ronald Adams, managing director of SNEPCo, noted that Nigeria’s deepwater reserves are among the most promising globally, not just for oil but also for gas fields that support cleaner energy solutions, power domestic needs, and help reduce global emissions.
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With onshore and shallow water production in decline and challenged by pipeline vandalism and crude oil theft, many international oil companies, including Shell, Chevron, and TotalEnergies, are shifting investment offshore, where operations are more secure and scalable.
In 2023, Nigeria’s Bonga field, operated by SNEPCo, reached a historic milestone by exporting one billion barrels of oil.
The success was followed by progress on the $5 billion Bonga North deepwater project, which reached the FID in 2025, further strengthening Nigeria’s offshore energy.
