Nigeria has approved the sale of TotalEnergies stake in an oil block that includes the Bonga field to Shell Plc and Nigerian Agip Exploration valued at $510 million.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which is the regulator for upstream operations, signed off on a Sales Purchase Agreement (SPA) by TotalEnergies Exploration and Production Nigeria Limited to assign its entire 12.5 per cent contractor interest in Oil Mining Lease (OML) 118 to Shell Nigeria Exploration and Production Company (SNEPco) and Nigerian AgipExploration Limited (NAE).
According to a statement, the regulator said TotalEnergies would transfer 10 per cent of its interest to SNEPco at a cost of $408 million while Agip will pay $102 million for the remaining 2.5 per cent.
The NUPRC said that pursuant to Section 95 of the Petroleum Industry Act 2021, the commission carried out due diligence on SNEPco to ascertain their financial capacity and technical competence.
“SNEPco and NAE have demonstrated both technical and managerial competence to optimally contribute to the upstream operations (explore, develop and produce) in OML 118. They already maintain a participating interest in the asset.
“Based on the presentations and documents submitted, there is a clear evidence that they have access to funding to meet their financial obligations,” the commission said.
The NUPRC further stated that TotalEnergies, a committed operator in Nigeria’s vibrant upstream sector, had also paid the statutory application fee for the deal.
The upstream petroleum regulator noted that SNEPCO and NAE will bear the decommissioning and abandonment liabilities owed by TotalEnergies to the Federal Government of Nigeria with respect to the divested interest.
It explained that the divestment is subject to a ministerial consent in line Sections 95(1), (2), (7), (11) and 12 of the Petroleum Industry Act, 2021.
The Commission therefore expects SNEPco and NAE to pay 5 per cent and 2 per cent respectively of the transaction purse on the total value of $510 million as premium on ministerial consent and processing fees.
The assignees are also to give an undertaking in favour of the Commission that they will bear all the decommissioning and abandonment liabilities and the host community liabilities owed by TotalEnergies.
Shell is already the operator of OML 118 with a 55 per cent stake while Esso Exploration and Production help 20 per cent and Agip had a 12.5 per cent share before the completion of the sale.
The TotalEnergies divestment in Nigeria is part of efforts to halt its mounting global debt. The oil major is targeting around $3.5 billion in assets sale worldwide including oil assets and renewable projects.
Earlier in the week, the NUPRC cancelled a separate deal between TotalEnergies and Chappal for a 10 per cent stake in one of its assets, due to failure to meet financial commitments.