TotalEnergies has sold its minority share in a major Nigerian onshore oil joint venture to Mauritius-based Chappal Energies for $860 million. This significant transaction was announced by the French energy group. CEO Patrick Pouyanne had indicated earlier this year that TotalEnergies planned to exit its 10% stake in the Shell Petroleum Development Company of Nigeria Limited (SPDC). This joint venture has faced numerous challenges, including oil spills caused by theft, sabotage, and operational issues, leading to expensive repairs and high-profile lawsuits.
Chappal Energies specializes in investments in deep value and distressed brownfield upstream assets, particularly in the Niger Delta region. The sale includes an interest in 15 licenses primarily producing oil, with TotalEnergies netting 14,000 barrels of oil-equivalent per day in 2023. Additionally, three licenses produce mainly gas, contributing to 40% of TotalEnergies’ Nigeria LNG gas supply. Although TotalEnergies has sold its participation stake in the gas licenses to Chappal, it will retain the share of production in its portfolio. Moreover, it will continue to access the associated infrastructure and pipelines necessary to supply gas to the Nigeria LNG plant.
Nicolas Terraz, president of exploration and production at TotalEnergies, emphasized the strategic nature of this divestment. He stated, “This divestment allows us to focus our onshore Nigeria presence solely on the integrated gas value chain. It is designed to ensure the continuity of feed gas supply to Nigeria LNG in the future.”
The transaction is anticipated to close by the end of the year, subject to regulatory approvals. Earlier this year, Shell also agreed to sell its 30% stake in SPDC to a consortium of five mostly local companies for up to $2.4 billion. The Nigerian National Petroleum Corporation (NNPC) holds a 55% stake in the joint venture, while Italy’s Eni owns 5%.
In recent years, Exxon Mobil, Eni, and Norway’s Equinor have all sold assets in Nigeria to focus on newer, more profitable operations elsewhere. 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.
This sale marks a strategic shift for TotalEnergies as it reallocates its resources to more lucrative ventures while maintaining a significant presence in Nigeria’s gas sector. The company’s decision to divest its onshore oil assets aligns with its broader strategy to focus on sustainable energy and profitable operations.
The Niger Delta region, rich in oil and gas resources, has long been a focal point for international energy companies. However, the area has been plagued by instability, theft, and environmental degradation. The sale to Chappal Energies, a company with a track record in managing distressed assets, signals a potential shift in how these resources are managed and utilized.
Chappal Energies, with its focus on deep value investments, is poised to leverage these assets to enhance production and profitability. The company’s experience in the Niger Delta region equips it to handle the unique challenges posed by the area. This acquisition represents a significant opportunity for Chappal Energies to expand its footprint and influence in the Nigerian oil and gas sector. For TotalEnergies, this divestment allows the company to streamline its operations and concentrate on high-value assets.
