Nigeria Opening New Deepwater Oil Exploration Investment Horizon

Nigeria’s persistent inability to meet its production quota set by the Organization of the Petroleum Exporting Countries (OPEC) has prompted a renewed push into deepwater oil exploration and development, as the country adopts a broader, more integrated strategy to boost output in 2026.

This is driven by a series of regulatory reforms, finalised legal settlements, and new licensing rounds aimed at boosting production to 3 million barrels per day. The country is positioning itself to lead Africa in upstream oil and gas capital expenditure by 2026.

Currently, Eni is positioning to embark on deepwater exploration investments in Nigeria after President Bola Ahmed Tinubu met its Chief Executive Officer (CEO), Claudio Descalzi, in Abuja to discuss the company’s deepwater expansion plans, including the recent conversion of Oil Prospecting Licence 245 (OPL 245) into new development and exploration licenses.

Under an agreement with the Federal Government of Nigeria, OPL 245 has been converted into two Petroleum Mining Leases (PML 102 and 103) and two Petroleum Prospecting Leases (PPL 2011 and 2012), following a mutually agreed settlement of claims and the discontinuation of arbitration proceedings at the International Centre for Settlement of Investment Disputes (ICSID).

Nigerian Agip Exploration Limited will operate the licenses alongside partners Nigerian National Petroleum Company Limited (NNPC) and Shell Nigeria Exploration and Production Company Limited (SNEPCO).

The conversion clears the path for the development of the Zabazaba and Etan deepwater fields under PML 102 and 103.

The Etan-Zabazaba project is estimated to contain approximately 500 MMbbl of reserves and is planned around a 150,000-bopd floating production, storage and offloading (FPSO) facility. Associated gas volumes of up to 200 MMscf/d at peak are expected to be exported to Nigeria LNG.

Eni, which has operated in Nigeria since 1962, also discussed its broader offshore portfolio, including interests in the Abo and Bonga fields and Nigeria LNG. The company recently increased its stake in OML 118 to 15 per cent, reinforcing its position in Nigeria’s deepwater sector, where it currently produces approximately 55,000 boed on an equity basis.

Also, the 2026 Licensing Round, a major licensing round initiated in January 2026, has opened 50 oil and gas blocks to tender, with a significant focus on deepwater and frontier exploration.

In addition, the TGS Deepwater Seismic Survey, in partnership with the NUPRC, launched a 3D seismic survey (Laide) covering 11,700 square kilometres in the outer toe thrust deepwater area of the eastern Niger Delta to identify new drilling prospects.

Adding to this oil major, Chevron announced plans to bring in a new rig in late 2026 to drill exploration wells near the Agbami field and expand its footprint in the country following improved security and regulatory clarity.

Following the Petroleum Industry Act (PIA) reforms and new fiscal incentives introduced in 2024-2025, over $8 billion in foreign direct investment has been attracted to the sector.

TotalEnergies, on its part, is targeting a 150-million-barrel prospect in 2026, with plans to potentially tie back discoveries to existing floating production, storage and offloading (FPSO) units.

These initiatives are expected to drive a significant portion of the projected $41 billion in E&P capital expenditure in Africa by 2026, with Nigeria leading the continent.