FRENCH energy group TotalEnergies has sold its Nigerian onshore oil assets for $860 million to Mauritius-based Chappal Energies.
The company reportedly disclosed on Wednesday, July 17, that the transaction was expected to be concluded by the end of the year, subject to regulatory approvals.
The sale includes an interest in 15 licences producing mostly oil, with production netting 14,000 barrels of oil equivalent per day in 2023.
Three additional licences produce mostly gas and currently account for 40 per cent of TotalEnergies’ Nigeria Liquified Natural Gas (LNG) gas supply.
With the divestment, TotalEnergies joins other oil giants including Exxon Mobil, Eni and Norway’s Equinor which recently sold their Nigerian oil assets to focus on newer, more profitable operations elsewhere.
The divestments and exit of International Oil Companies (IoCs), energy analysts say, signposts a poor operating environment in Nigeria’s oil sector as deep-pocket investors are exiting and divesting in a more favourable environment.
Notably, the French energy giant had in February hinted at its plans to exit the Nigerian onshore oil joint venture, following Shell’s divestment in January this year.
Earlier this year, Shell also agreed to sell its 30 per cent stake in SPDC to a consortium of five mostly local companies for up to $2.4 billion.
At the time, the chief executive officer of TotalEnergies, Patrick Pouyanne, said the company would exit its 10 per cent stake in Nigeria and divest its share because producing oil in the Niger Delta was no longer in line with its health, security and environmental] policies.
The Shell Petroleum Development Company of Nigeria Limited (SPDC) has been struggling with hundreds of oil spills as a result of theft, sabotage and operational issues that led to costly repairs and high-profile lawsuits.
TotalEnergies, however, said it sold its participatory stake in the gas licences to Chappal Energies, but that the share of production would stay in Total’s portfolio, as well as access to the associated infrastructure and pipelines to supply the Nigeria LNG plant with gas.
“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,” the President of Exploration and Production at TotalEnergies, Nicolas Terraz, was quoted to have said.
TotalEnergies, which produced a total of 219,000 barrels of oil equivalent per day in 2023 in Nigeria, remains a major operator of offshore fields in the West African country.
Chappal Energies focuses on investments in deep value and distressed brownfield upstream assets in the Niger Delta region.
The ICIR reported in an exclusive interview that International Oil Companies’ exit and divestments are affecting Nigeria’s low oil production of 1.2 million barrels per day, having benchmarked the 2024 budget on 1.7 million barrels per day.
“The IoCs move to where there is better fiscal discipline and enabling environment for their operations.
The defaults in the way we are implementing the Petroleum Industry Act is one of the reasons they are exiting the country,” a former chairman of the major Oil Marketers Association of Nigeria, Olatunji Oyebanji told The ICIR in the interview.