Nexen Announces Development Approval for the Usan Project, Offshore Nigeria

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Feb. 27, 2008

Nexen announced today that development of the Usan field, offshore Nigeria has received all necessary approvals to proceed. The Usan field was discovered in 2002 and is located approximately 100 kilometers offshore in water depths ranging from 750 to 850 meters. The field development plan includes a floating production, storage and offloading (FPSO) vessel with a storage capacity of two million barrels of oil.

The Usan field is expected to come on stream approximately four years from the award of major contracts and will ramp up to a peak production rate of 180,000 barrels of oil per day (36,000 bopd net to Nexen). Associated gas will be re-injected into the reservoir.

Nexen's capital investment is expected to be within the range of US$1.6 to US$2.0 billion over the development period with an estimated 2008 capital commitment of approximately US$300 million. Contracts for deep-water facilities are expected to be awarded shortly and will reflect support of local content initiatives established by the Nigerian government.

Nexen also announced that the government has approved the conversion of Oil Prospecting License (OPL) 222 into two Oil Mining Leases (OMLs 138 and 139), each covering half the original area of OPL 222. The Usan field development is located in OML 138 and is covered by the original production sharing contract for OPL 222 issued in 1993, with the Nigerian National Petroleum Corporation (NNPC) as concessionaire, and conveys the right to develop and produce crude oil and continue with exploration activity. Nexen has a 20% interest in exploration and development along with Elf Petroleum Nigeria Limited (20% and Operator), Chevron Petroleum Nigeria Limited (30%) and Esso Exploration and Production Nigeria (Offshore East) Limited (30%).

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