Victor EzejaTotalEnergies has signed a Share Purchase Agreement (SPA) with Mauritius-based energy firm, Chappal Energies, to sell its minority interest in a Nigerian onshore oil joint venture for $860 million.
The French energy group announced this in a statement released on Wednesday, 17 July 2024.
Join our WhatsApp ChannelAccording to the statement, the asset is 10 per cent interest in the Shell Petroleum Development Company Joint Venture (SPDC JV) licenses in Nigeria.
In the SPDC JV, the Nigerian National Petroleum Corporation Ltd (NNPCL) has 55 per cent, Shell Petroleum Development Company of Nigeria has 30 per cent (the operator), TotalEnergies EP Nigeria has 10 per cent and Nigerian Agip Oil Company (NAOC), 5 per cent. The JV holds 18 licenses in the Niger Delta.
TotalEnergies explained that by selling its 10 per cent participating interest, it will also sell all its rights and obligations in 15 licenses of SPDC JV, which are producing mainly oil.
According to 2023 data, production from these licenses represented approximately 14,000 barrels equivalent per day in Company share.
Under the signed agreement, TotalEnergies EP Nigeria will also transfer to Chappal Energies its 10% per cent participating interest in the three other licenses of SPDC JV which are producing mainly gas (OML 23, OML 28 and OML 77), while retaining full economic interest in these licenses which currently account for 40 per cent of Nigeria LNG gas supply.
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“The transaction was concluded for a firm consideration of USD 860 million. Closing is subject to customary conditions, including regulatory approvals,” the company stated.
Commenting on the deal, Nicolas Terraz, President Exploration & Production of TotalEnergies, said is focusing on managing its offshore oil and gas assets. He added that the company’s onshore presence would only be in the gas value chain.
“TotalEnergies continues to actively manage its portfolio in Nigeria, in line with its strategy to focus on its oil offshore and gas assets,” Terraz stated.
“After the launch of the Ubeta gas development on OML58 license last month, this divestment of our interest in SPDC JV licenses 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.”
Conclusion of the deal awaits regulatory approvals the Federal Government.
Prime Business Africa reports that many International Oil Companies (IOCs) have continued to push for divestment of their onshore oil assets and focus on offshore. This is due to cases of oil spills as a result of theft, sabotage and operational issues which cause environmental degradation. This has also often led to incurring high costs in repair of damaged facilities and lawsuits by the companies.
It would be recalled that Shell had earlier this year, 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.
Exxon Mobil, Eni and Norway’s Equinor have all sold assets in Nigeria in recent years to focus on more profitable operations elsewhere.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
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