TotalEnergies has announced the sale of its minority share in a significant Nigerian onshore oil joint venture to Mauritius-based Chappal Energies for $860 million.
This sale is part of the French energy giant’s broader strategy to streamline operations and focus on more profitable ventures.
Details of the Transaction
The divestment includes TotalEnergies’ 10 per cent stake in the Shell Petroleum Development Company of Nigeria Limited (SPDC).
SPDC has faced numerous challenges, including oil spills due to theft, sabotage, and operational issues, leading to costly repairs and high-profile lawsuits.
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CEO Patrick Pouyanne had indicated in February that the company was looking to exit its stake in SPDC due to these ongoing issues.
Chappal Energies, known for investing in distressed brownfield upstream assets in the Niger Delta region, has agreed to the purchase. The sale encompasses interests in 15 oil mining leases and the Forcados and Bonny export terminals, which collectively produced 14,000 barrels of oil equivalent per day for TotalEnergies in 2023.
Additionally, three of these licences primarily produce gas, accounting for 40 per cent of TotalEnergies’ Nigeria LNG gas supply.
Retention of Gas Production Rights
Interestingly, while TotalEnergies has sold its stake in the gas-producing licences to Chappal Energies, it retains the share of production and access to the associated infrastructure and pipelines to supply gas to the Nigeria LNG plant.
This strategic move allows TotalEnergies to concentrate its onshore presence in Nigeria exclusively on the integrated gas value chain.
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“This divestment allows us to focus our onshore Nigeria presence solely on the integrated gas value chain and is designed to ensure the continuity of feed gas supply to Nigeria LNG in the future,” stated Nicolas Terraz, President of Exploration & Production at TotalEnergies.
Financing and Future Outlook
The transaction is set to close by the end of the year, pending regulatory approvals. Financing for the deal will be provided by an entity related to TotalEnergies or a financial institution selected by the French company. Additionally, trading house Trafigura and a syndicate of international banks will also provide funds.
Broader Industry Trend
This sale is part of a broader trend of international oil companies divesting from Nigerian assets.
Earlier this year, Shell agreed to sell its 30 per cent stake in SPDC to a consortium of five mostly local companies for up to $2.4 billion. The Nigerian National Petroleum Corporation (NNPC) holds a 55 per cent stake in the joint venture, while Italy’s Eni has 5 per cent.
Other major oil companies, including Exxon Mobil, Eni, and Norway’s Equinor, have also sold assets in Nigeria in recent years to focus on newer, more profitable operations elsewhere.
Continued Presence in Offshore Operations
Despite these divestments, TotalEnergies remains a significant operator of offshore fields in the West African country. The company produced a total of 219,000 barrels of oil equivalent per day in Nigeria in 2023, maintaining a robust presence in the region’s energy sector.
