French oil major, TotalEnergies, is planning to sell its onshore oil asset in Nigeria to an indigenous oil company, Chappal Energies, for the sum of $860 Million, as per Bloomberg report.
The deal, set to be finalized by December 31, 2024, represents TotalEnergies’ strategic move to divest from Nigeria’s onshore segment in favour of a more secure offshore environment.
The transaction involves acquiring a 10% stake in 15 oil mining leases, as well as ownership of the Forcados and Bonny export terminals, both critical assets within the Shell Petroleum Development Company (SPDC) joint venture.
Chappal’s financing will be sourced from an entity affiliated with TotalEnergies or a financial institution chosen by the French company, as stated.
Trading firm Trafigura and a consortium of global banks are also contributing funds.
Earlier reports suggest that TotalEnergies was planning to divest its minority stake in a significant Nigerian onshore oil joint venture.
The CEO of the oil major, Patrick Pouyanne, announced this during the company’s financial results presentation in February, 2024.
Pouyanne said that the company intends to restructure its portfolio, citing the growing challenges associated with oil production in the Niger Delta as a primary reason for the decision.
“We want to divest our share of SPDC, and we are looking to reshape the portfolio.
“Fundamentally it’s because producing this oil in the Niger Delta is not in line with our [Health, Security, and Environmental] policies, it’s a real difficulty,” Pouyanne said.
Pouyanne, however, stated that the company intends to retain its Nigerian gas assets, considering them essential for the company’s future expansion in liquefied natural gas development over the upcoming years.
The Shell Petroleum Development Company of Nigeria Limited (SPDC), in which TotalEnergies holds a 10% interest, has struggled with numerous onshore oil spills stemming from theft, sabotage, and operational challenges, resulting in expensive repairs and notable legal battles over the years.
TotalEnergies is joining the trend of International Oil Companies (IOCs) divesting from Nigeria’s onshore sector after decades of operations.
Despite this strategic shift, the French conglomerate remains a significant player in the country’s offshore fields.
The Nigerian onshore oil industry has recently seen major international oil companies exit, allowing local players to step in.
In May 2024, Shell announced its agreement to sell its 30% stake in SPDC to a consortium primarily composed of local companies for up to $2.4 billion.
Additionally, other IOCs such as ExxonMobil and Norway’s Equinor have also sold assets in Nigeria in recent years to focus on newer, more profitable operations elsewhere.
