By Olakunle Oke
A major deal by French energy giant, TotalEnergies SE, to sell its onshore oil assets in Nigeria has fallen through after regulators withdrew their approval. This setback is a blow to the company’s strategy of shedding older assets to reduce its surging debt.
TotalEnergies had agreed to sell its 10% stake in the Shell Petroleum Development Company of Nigeria Limited (SPDC) to Chappal Energies, a Mauritius-based firm, for a reported $860 million. However, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) announced on Tuesday that it had revoked the ministerial consent for the transaction.
According to NUPRC spokesperson Eniola Akinkuoto, both parties failed to meet the financial obligations and strict deadlines attached to the deal, even after multiple extensions. It was revealed that Chappal Energies struggled to secure the necessary funding, which in turn prevented TotalEnergies from paying crucial regulatory fees and setting aside funds for environmental cleanup and future liabilities. Both companies have so far declined to comment on the matter.
TotalEnergies holding onto a difficult asset plagued by environmental and security challenges. The SPDC’s onshore operations have long been a hotbed for oil spills caused by theft, sabotage, and operational failures, leading to costly repairs. This situation stands in contrast to Shell’s successful sale of its 30% stake in the same venture earlier this year. Other major oil firms like ExxonMobil, Eni, and Equinor have also scaled back or exited their onshore investments in Nigeria, preferring to focus on more profitable projects.
For TotalEnergies, this is a significant setback to its debt-reduction efforts. The company’s debt ballooned by 89% to $25.9 billion by July. This failed sale was one of three planned divestments that the company’s CEO, Patrick Pouyanné, had hoped would generate a total of $3.5 billion by year-end to help ease the financial burden.
Despite the collapse, TotalEnergies still maintains a strong presence in Nigeria, with stakes in 15 oil-producing and three gas field licenses. These assets yielded approximately 14,000 barrels of oil equivalent per day in 2023 and account for 40% of its supply to Nigeria LNG.
The SPDC’s ownership structure is now back to its previous state, with the Nigerian National Petroleum Corporation Limited holding 55%, Shell (the operator) 30%, TotalEnergies 10%, and Eni 5%.
