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Hawilti is a commodities and investment research agency specialised in sub-Saharan Africa. From its offices across the continent, Hawilti promotes transparency throughout African extractive industries…

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Nigeria Looks To Its Shallow Water Oil Fields To Boost Production

  • Nigeria has struggled to meet its production goals in recent years.
  • With oil prices remaining above $100 per barrel, Nigeria is eager to ramp up its production.
  • Shallow-water oil fields offer a promising opportunity for the country to increase its output. 
Oil fields

Despite the gradual lifting of OPEC quotas, Nigeria has struggled for several months to increase production back up. While the country has a production capacity of over 2 million barrels of oil per day (bopd), oil output stood at 1.3m bopd last year according to government data.  As oil prices enter a new supercycle, Nigeria’s production underperformance coupled with continued imports of finished petroleum products expose it to several macroeconomic risks. Since the start of the year, for instance, the country’s petrol subsidies program has become so expensive that the government is now planning to tap into its €2bn Eurobond sale of 2021 to fund it. 

But while Nigeria cannot control oil prices, it certainly can work towards improving oil production to mitigate vulnerabilities and try to make the best of the current oil prices cycle. In fact, a closer look at current shallow water market activity has observers hopeful that competent local players could be starting to make the difference the country needs. 

Almost half of Nigeria’s oil production relies on its onshore fields, but repeated crude theft and pipeline vandalism make it challenging to ramp up output there in the short term. Meanwhile, deep-water fields are maturing and there is no clear indication that the recently enacted Petroleum Industry Act (PIA) will revive interest in capital-intensive greenfield deep-water activity in Nigeria. 

That leaves shallow-water fields as the most promising opportunities to increase output in the short term. So far, shallow-water assets have represented less than a fourth of Nigeria’s oil output despite offering cheaper development options. But as local independents step up to replace IOCs in the country, several developments are back on the table.

In the middle of the COVID-19 pandemic, Nigerian independent First E&P already achieved first oil at its Anyala & Madu complex on OMLs 83 and 85. Since starting production in October 2020, the company has become the third biggest local producer after SEEPCo and Seplat Energy. 

Related: What The West Is Getting Wrong About OPEC

First E&P’s joint-venture with Dangote Industries, West Africa E&P (WAEP), is now embarking on the development of the Kalaekule field on OML 72. Further west, General Hydrocarbon Limited (GHL), the new operator of OML 120, is also moving ahead with the redevelopment of the Oyo field this year. 

These projects are currently supporting offshore market activity in Nigeria and have all one thing in common: local content. As IOCs shy away from additional investments in Nigeria and exit some of their licenses, Nigeria is left to rely on its local operators and local services companies to take the lead. 

Both WAEP and GHL have selected the Century Group, the only Nigerian wholly-owned company providing FPSO solutions at the moment, to provide the FPSOs required for the Kalaekule and Oyo fields. The company is one of the often-overlooked Nigerian services providers that have, over the years, developed the capacities required to operate and maintain critical oil & gas assets safely and cost-efficiently. 

While the narrative on Nigeria is dominated by the exit of its biggest foreign investors, the local capacity that the country has built over the past decades is often under-estimated. Since the adoption of the Local Content Act in 2010, several Nigerian energy companies have developed expertise in operating and maintaining critical infrastructure assets. These local players may lack the financial power of IOCs, but they have proven their ability to successfully navigate the country’s above-the-ground risks. 


The ongoing development of shallow-water fields in Nigeria is sending promising signs to an industry deeply worried about the impact that IOCs’ divestment will have on its future. By not taking chances on new market entrants and putting the right assets in the hands of the right team, the country is steadily finding new equations that could help it navigate current market volatility. 

By Hawilti

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