With Shell shedding Nigerian onshore business, TotalEnergies follows suit to pursue LNG and offshore oil & gas opportunities

TotalEnergies EP Nigeria, a subsidiary of France’s energy giant TotalEnergies, has made its move to divest interests in the Shell Petroleum Development Company of Nigeria Limited (SPDC) joint venture (JV) seven months after the UK-headquartered Shell did the same. However, the French player will retain its stake in gas supply to Nigeria LNG (NLNG), as liquefied natural gas (LNG), alongside offshore oil and gas assets, are part of the firm’s business strategy.

The sale and purchase agreement (SPA) with Chappal Energies enables TotalEnergies to sell its 10% interest in Nigeria’s SPDC JV, which is an unincorporated joint venture between Nigerian National Petroleum Corporation (55%), Shell Petroleum Development Company of Nigeria (30%, operator), TotalEnergies EP Nigeria (10%), and NAOC (5%), holding 18 licenses in the Niger Delta.

This comes after Shell made arrangements in January 2024 to divest its interest in SPDC, with a net book value of around $2.8 billion, to Renaissance, a consortium of five companies – ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin – to turn all its attention to deepwater and integrated gas businesses in the African country.

TotalEnergies has based its decision on similar grounds and will sell its interests for a firm consideration of $860 million. Thanks to this deal, Chappal Energies will get the French giant’s 10% participating interest and all its rights and obligations in 15 licenses of SPDC JV, producing mainly oil, which represented approximately 14,000 barrels equivalent per day for its share in 2023.

In addition, the company will also transfer its 10% participating interest to Chappal Energies in the three other licenses of SPDC JV which are producing mainly gas – OML 23, OML 28, and OML 77 – while retaining a full economic interest in these licenses that currently account for 40% of Nigeria LNG gas supply. The closing of the transaction is subject to customary conditions, including regulatory approvals.

Nicolas Terraz, President Exploration & Production of TotalEnergies, commented: “TotalEnergies continues to actively manage its portfolio in Nigeria, in line with its strategy to focus on its oil offshore and gas assets. 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.”

After TotalEnergies drilled three wells on the Akpo West field in the PML2 license, previously known as OML 130, offshore Nigeria, which also contains the Akpo field, the production from these wells, tied to the FPSO Akpo, was confirmed in February 2024. 

The French giant has also been busy elsewhere, as illustrated by a deal it inked to buy a 60% operating interest in Block STP02 offshore São Tomé and Príncipe and its efforts to review the options regarding a potential withdrawal from an offshore block in South Africa.

Chappal Energies is actively working on expanding its portfolio in Nigeria, as it also agreed to buy Equinor’s Nigerian business, including a stake in a Chevron-operated oil field, in November 2023. The Norwegian giant’s sale is part of its efforts to optimize its international oil and gas portfolio and focus on core areas.

Moreover, Chappal intends to contemplate a senior secured bond issue of up to $450 million with a six-year tenor to partly finance its acquisition activities in the upstream oil and gas industry due to its pursuit of several divestments from international oil companies (IoCs) in Nigeria.