Home Business Economic Hardship: TotalEnergies To Sell Nigeria Onshore Assets To Chappal Energies For $860M
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Economic Hardship: TotalEnergies To Sell Nigeria Onshore Assets To Chappal Energies For $860M

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TotalEnergies has entered into a definitive agreement to sell its onshore oil assets in Nigeria to indigenous firm Chappal Energies for $860 million, according to a report by Bloomberg.

The transaction is expected to be completed by December 31, 2024. The company is pivoting away from Nigeria’s challenging onshore oil sector towards more secure offshore ventures.

The deal includes TotalEnergies’ 10 per cent stake in 15 oil mining leases and ownership of the critical Forcados and Bonny export terminals, key infrastructure within the Shell Petroleum Development Company joint venture.

Chappal Energies’ payment for the acquisition will be facilitated by an affiliate of TotalEnergies or a selected financial institution. There will be additional contributions from trading firm Trafigura and a consortium of global banks.

Earlier reports from West Africa Weekly had indicated TotalEnergies’ intent to divest its minority stake in the Nigerian onshore oil joint venture. CEO Patrick Pouyanne stated during the company’s February 2024 financial results presentation that this decision aligns with their portfolio restructuring efforts.

Pouyanne emphasised challenges associated with onshore oil production in the Niger Delta. He cited health, security, and environmental concerns as significant factors influencing the divestment decision.

Despite the divestment from onshore assets, TotalEnergies is committed to its Nigerian gas assets.

The Shell Petroleum Development Company of Nigeria Limited (SPDC), in which TotalEnergies holds a 10 per cent interest, has faced persistent challenges including oil spills from theft, sabotage, and operational issues, leading to substantial costs and legal disputes over the years.

TotalEnergies’ move mirrors a trend among International Oil Companies (IOCs) withdrawing from Nigeria’s onshore sector after years of operation. Shell, for instance, recently announced its sale of a 30 per cent stake in SPDC to a consortium predominantly composed of Nigerian companies for up to $2.4 billion. Similarly, other IOCs like ExxonMobil and Equinor have also divested their Nigerian assets to focus on more profitable ventures elsewhere. This speaks to the challenging economic situation in Nigeria.

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