French energy giant TotalEnergies is considering divesting its minority share in a major Nigerian onshore oil joint venture, following Shell’s recent exit from the same venture due to operational challenges. CEO Patrick Pouyanne cited environmental concerns and policy alignment as key factors driving the decision.
TotalEnergies holds a 10% stake in the Shell Petroleum Development Company of Nigeria Limited (SPDC), which has faced numerous onshore oil spills attributed to theft, sabotage, and operational issues. Pouyanne emphasized that the production of oil in the Niger Delta region does not align with the company’s Health, Security, and Environmental (HSE) policies, making it a challenging endeavor.
SPDC operates a significant network of pipelines, oil and gas wells, gas plants, export terminals, and a power plant in Nigeria. Despite its planned divestment from the onshore sector, TotalEnergies remains a major player in Nigeria’s offshore fields, having produced 219,000 barrels of oil equivalent per day in 2023. The company recently announced the start-up of the Akpo West oilfield located offshore.
Shell had previously announced its decision to sell its 30% stake in SPDC to a consortium of primarily local companies for up to $2.4 billion. The joint venture partners include the Nigerian National Petroleum Corporation (NNPC) with a 55% stake and Italy’s Eni with 5%. Other international oil companies like Exxon Mobil, Eni, and Equinor have also divested assets in Nigeria in recent years to focus on more lucrative opportunities elsewhere.
Pouyanne clarified that TotalEnergies intends to retain its Nigerian gas resources, which are pivotal for the company’s planned expansion of liquefied natural gas (LNG) development in the coming years. However, any potential sale of its stake in SPDC would necessitate approval from the Nigerian government.
The move by TotalEnergies reflects a broader trend of international oil companies reevaluating their investments in Nigeria’s oil and gas sector amid operational challenges and shifting global energy dynamics. Despite this divestment from onshore assets, TotalEnergies remains committed to leveraging Nigeria’s abundant gas resources for its LNG projects while aligning with its environmental and operational priorities.
Nigeria, as Africa’s largest oil producer, continues to attract investment from international oil companies due to its significant hydrocarbon reserves. However, challenges such as security risks, community unrest, and regulatory uncertainties have prompted some companies to reassess their presence in the country’s oil-rich regions.
In conclusion, TotalEnergies’ move to consider divesting its Nigerian onshore oil assets reflects a strategic realignment towards more sustainable and environmentally responsible business practices.
