TotalEnergies EP Agrees to Sell 10% Stake in Oil, Gas Assets to Chappal for $860m

•French oil giant confirms deal, announces retention of interest in gas supply to NLNG

Emmanuel Addeh in Abuja

Chappal Energies yesterday announced the acquisition of TotalEnergies EP Nigeria Limited’s 10 per cent stake in key oil and gas assets for an aggregate consideration of  $860 million, subject to contractual and regulatory approvals.

A statement by the company stated that the Sale and Purchase Agreement (SPA) is for TotalEnergies’ non-operated interest in its onshore and shallow water assets within the Shell Petroleum Development Company (SPDC) JV in the Niger Delta. The transaction is expected to close by December 31, 2024.

The acquisition includes a 10 per cent interest in 15 Oil Mining Leases (OMLs) and two main export terminals in Nigeria, specifically the Forcados and Bonny Terminals that are part of the SPDC JV.

The Nigerian National Petroleum Corporation Limited (NNPC) holds a 55 per cent stake, SPDC operates with a 30 per cent stake, and the Nigerian Agip Oil Company (NAOC) has a 5 per cent stake in the JV.

The transaction will also see Chappal Energies acquire a 10 per cent participating interest in the three other OMLs within the SPDC JV which are mainly gas producing, specifically OML 23, OML 28 and OML 77.

However, it will see TotalEnergies retain an economic interest in the licenses which currently account for 40 per cent of Nigeria’s Liquefied Natural Gas (LNG) gas supply. Chappal Energies will have rights to the standalone undeveloped oil reserves within the three OMLs.

“Aggregate consideration for the transaction is $860 million. Financing will be provided by a TotalEnergies company entity and/or any financial institution selected by TotalEnergies, Trafigura and a syndicate of international banks.

“This strategic acquisition increases Chappal Energies’ asset base and adds significant reserves to the company’s balance sheet. The portfolio includes over 40 producing fields with a network of pipelines, flow stations, processing facilities and two major terminals,” the statement added.

Managing Director of Chappal Energies, Ufoma Immanuel,  commented thus: “This acquisition marks a significant expansion in the Niger Delta, thereby diversifying our Nigeria footprint between the offshore and onshore basins. Chappal Energies becomes the first Nigerian company to execute two significant transactions within a 12-month period.

“The transaction is poised to bring substantial benefits to stakeholders, including shareholders, employees, local communities, and the national economy. The closing is subject to certain conditions, including all regulatory and contractual approvals.”

Chappal Energies described itself as an energy company focusing on unlocking latent value in Africa’s oil and gas resources as well as revitalising aging assets with solutions that secure longevity in a socially and environmentally sustainable manner.

It added that the company will embark on value-harnessing activities, which will include enhancing operational efficiency, produced water management, improved evacuation logistics, gas development, capex optimisation, and infrastructure replacement. 

Also yesterday, TotalEnergies, Paris, confirmed the deal, but stated that it will be retaining the supply of gas to Nigeria LNG (NLNG).

Under the SPA signed with Chappal Energies, TotalEnergies EP Nigeria, the statement said, production from the licenses represented approximately 14,000 barrels equivalent per day in company share in 2023.

“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”, said the President, Exploration & Production of TotalEnergies, Nicolas Terraz.

TotalEnergies has been present in Nigeria for more than 60 years and employs today more than 1,800 people across different business segments. Nigeria is one of the main contributing countries to TotalEnergies’ hydrocarbon production with 219,000 boe/d produced in 2023.

 TotalEnergies also operates an extensive distribution network which includes about 540 service stations in the country.

Aside TotalEnergies, other ongoing divestment deals include: The proposed sale of Mobil Producing Nigeria Unlimited (MPNU) assets to Seplat Energies, divestment of SPDC assets to Renaissance Consortium, Sale of some Agip Nigeria assets to Oando as well as the SPA between Equinor and Chappal.