By Gideon Osaka
Nigeria’s deepwater oil sector is showing promising signs of revival, evidenced by a flurry of recent developments in the sector after years of regulatory uncertainty, stagnant investments, and project delays. A combination of strategic policy reforms in the upstream sector, encouraging fiscal frameworks, and renewed tactical alliances is driving a resurgence in investor confidence, ushering in what many industry stakeholders describe as a new dawn for offshore exploration in Africa’s largest energy market.
Nigeria’s deep offshore basins are estimated to hold billions of barrels in untapped reserves, and new investments could help increase output significantly. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently reported that over $8 billion in Final Investment Decisions (FIDs) have been secured in the deepwater oil and gas segment within the past year alone, indicating a resurgence of investor confidence.
Also in a significant development for Nigeria’s oil and gas industry, Brazil’s state oil company, Petrobras, is seeking to re-enter Nigeria’s oil sector, with a specific focus on frontier deepwater acreage after over a decade the company exited the Nigerian market to focus on domestic projects.
Petrobras initiated its operations in Nigeria in 1998, participating in several deepwater projects. It held indirect stakes in notable fields such as Agbami (OML 127), Akpo, and Egina (OML 130), which were operated by Chevron and TotalEnergies, respectively. However, in 2020, Petrobras divested its 50% stake in Petrobras Oil & Gas B.V. (POGBV), marking its exit from the Nigerian oil sector.
The renewed interest from Petrobras comes on the heels of the upcoming Nigeria-Brazil Strategic Dialogue Mechanism (SDM) scheduled for June 2025, which presents an opportunity to execute sector-specific Memoranda of Understanding (MOUs) and unlock investment flows.
Petrobras’s interest in Nigeria is also part of a broader strategy to rebuild reserves and diversify its exploration portfolio by investing in new offshore opportunities outside Brazil. Earlier this year, the company expressed interest in acquiring stakes in African assets from major oil companies such as ExxonMobil, Shell, and TotalEnergies.
As Petrobras considers its return, the Nigerian government continues to implement reforms aimed at creating a more conducive environment for investment in the oil and gas sector. These efforts, coupled with the strengthening of international partnerships, are poised to revitalise Nigeria’s energy landscape and drive economic growth.
New projects sign of investor return
Beyond Petrobras, several national and international oil and gas companies are showing renewed interest in Nigeria’s energy sector, particularly in offshore and gas projects.
American oil giant ExxonMobil recently announced plans to invest $1.5 billion in its deepwater oil operations in Nigeria, focusing on the revitalisation of the Usan oilfield located in offshore block OML 138 in the eastern Niger Delta. This investment, from the second quarter of 2025 to 2027, is part of a broader strategy to increase production capacity from existing assets.
After divesting its onshore assets, Shell is focusing on offshore investments in Nigeria. The company has linked its commitment to fresh investments off the Nigerian coast to the approval of its sale of onshore oil assets in the Niger Delta. This decision comes shortly after announcing a $5 billion investment in the Bonga North project offshore Nigeria.
With the completion of the sale of its 10% stake in the Shell Petroleum Development Company (SPDC) joint venture to Chappal Energies, French energy company, TotalEnergies, is aligning its strategic shift to focus more on offshore oil and gas projects and liquefied natural gas (LNG) developments. Despite the divestment, TotalEnergies is strengthening its presence in Nigeria’s gas sector, planning to invest up to $6 billion in Nigeria over the coming years, focusing on natural gas and clean energy projects. TotalEnergies had in 2023 announced Final Investment Decision (FID) for the Ubeta gas condensate field in OML 58, an announcement that came as a major milestone for the company and the industry. Shortly after, Shell confirmed its plan to proceed with the Bonga North deepwater project, projected to deliver over 120,000 barrels per day at peak production. These decisions, after years of deferred investment, reflect growing confidence in Nigeria’s offshore oil potential.
Similarly, Chevron is reportedly in advanced discussions with the Nigerian National Petroleum Company Limited (NNPC Ltd) to expand its presence in deepwater blocks, while ExxonMobil has resumed drilling activities in Erha and Usan fields. NNPC Ltd itself is actively seeking joint ventures to unlock stranded deepwater assets.
Why IOCs, NOCs renewed interest
Several factors are contributing to the renewed interest of both national (NOCs) and international oil and gas companies (IOCs) in Nigeria’s energy sector.
The tide began to turn with the passage of the Petroleum Industry Act (PIA) in 2021 and subsequent implementation, and a host of other reforms started by the current administration. The PIA brought some form of clarity to Nigeria’s petroleum fiscal regime, especially in deep offshore areas where contractual ambiguities and high royalties had previously discouraged capital inflow.
Engr. Gbenga Komolafe, Commission Chief Executive (CCE) of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), said at a recent Energy Summit in London that the bold regulatory changes enabled by the PIA were among the reasons for restoring investor confidence and driving production growth in Africa’s largest energy market.
For deepwater operators, who face some of the highest operational costs in the upstream sector, the PIA’s restructured tax and royalty terms offered a more competitive playing field. The law replaced discretionary practices with rule-based systems, giving oil majors like Shell, Chevron, ExxonMobil, and TotalEnergies a firmer footing for long-term planning.
“The regulatory reforms under the PIA have significantly reduced uncertainties,” Komolafe said. “This has helped Nigeria re-emerge as a viable destination for deepwater investment.”
Komolafe credited recent progress to the policy environment created under President Bola Tinubu’s administration. Measures such as the reduction of entry barriers and the adjustment of fiscal frameworks have made it easier for investors to commit to Nigeria.
“Today, entry fees are pragmatic, calibrated to global realities, and tailored to support commercial viability on a case-by-case basis,” he said.
“Through the Presidential Executive Orders and the proactive stance of the NUPRC, Nigeria has redefined itself not only as a land of vast hydrocarbon potential but as a destination where opportunity meets ease of doing business, certainty, and investor value.”
Komolafe said Nigeria has moved from eight active rigs in 2021 to 36, with projections to reach 50 by the end of 2025. This upward trend also mirrors increases in reserves and production levels.
Additionally, the Nigerian government has introduced a number of tax incentives aimed at revitalising the oil and gas industry. These include exemptions on Value Added Tax (VAT) for key energy products and infrastructure, as well as tax reliefs for deep offshore oil and gas production.
Beyond regulatory reforms, macroeconomic and geopolitical dynamics are also working in Nigeria’s favour. With global oil demand projected to remain strong over the next decade, particularly in Asia, international oil companies (IOCs) are recalibrating portfolios to include high-margin, low-carbon barrels. Nigeria’s deepwater crude, known for its low sulfur content, is well-positioned to meet this demand.
“Deepwater fields in Nigeria offer long-term, stable production with relatively low carbon intensity,” notes Dr. Fatima Ahmed, an energy analyst at Wood Mackenzie. “With the right commercial terms, these are exactly the kind of assets that energy companies want in a transitioning world.”
Moreover, the ongoing push for energy security in Europe, following the Russia-Ukraine conflict, has made African oil increasingly attractive. Nigeria’s proximity and existing infrastructure provide a strategic export advantage.
Despite the optimism, challenges remain. Issues around offshore security, bureaucratic bottlenecks, and infrastructure deficits continue to pose risks to deepwater operations. Additionally, global competition for capital means Nigeria must remain aggressive in reform and investor engagement.
Experts warn that without swift action to finalise pending Final Investment Decisions (FIDs) and incentivise smaller deepwater players, Nigeria may lose ground to emerging markets like Guyana, Brazil, and Namibia, which offer equally attractive geological prospects.
Still, the momentum is unmistakable. With upstream reforms bedding in and new projects back on track, Nigeria’s deepwater sector is no longer a story of missed opportunities but one of cautious resurgence. As the government and stakeholders double down on collaboration, the outlook is bright for a sector that once symbolised uncertainty but now represents Nigeria’s best bet for sustained hydrocarbon growth.