TotalEnergies’ planned sale of a minority stake in a Nigerian onshore oil producer has collapsed, disrupting its strategy to divest mature, polluting assets and cut debt.
In July 2024, the company agreed to sell its 10% stake in Shell Petroleum Development Company of Nigeria (SPDC) to Mauritius-based Chappal Energies, following a wave of recent divestments by oil majors from Nigerian onshore assets.
The Nigerian regulator withdrew approval for the sale after both parties failed to meet financial obligations needed to finalize the deal, the Upstream Petroleum Regulatory Commission said.
The commission noted that ministerial consent required strict financial commitments to benefit the Nigerian people, but repeated extensions did not resolve the shortfall, forcing cancellation
Sources familiar with the deal said Chappal could not raise the $860 million, which left Total unable to pay regulatory fees or cover funds for environmental rehabilitation and future liabilities.
As a result, Total retains its stake in a business plagued by oil spills caused by theft, sabotage, and operational problems, which have triggered costly repairs.
Earlier, Shell sold its 30% SPDC stake to a consortium of mostly local companies for up to $2.4 billion, while Exxon Mobil, Eni, and Equinor also offloaded Nigerian assets to focus on more profitable operations elsewhere.
Chappal, which specializes in distressed and mature upstream assets in the Niger Delta, completed a $1.2 billion purchase of Nigerian assets from Equinor last year with support from Mauritius Commercial Bank and Trafigura.
Chappal has not revealed its financial backers for the proposed TotalEnergies purchase. Other SPDC shareholders include the Nigerian National Petroleum Corporation (55%) and Eni (5%).
The failed sale hinders Total’s plan to shed high-cost, polluting assets and reduce its $25.9 billion debt, which rose 89% in the year to July.
CEO Patrick Pouyanne had projected that the Nigerian sale, one of three deals, would generate $3.5 billion by year-end and lower Total’s debt-to-equity ratio, which reached 28% mid-year including leases and hybrid debt.
The collapse leaves Total holding interests in 15 licenses producing roughly 14,000 barrels of oil equivalent per day in 2023, plus three gas field licenses supplying 40% of Nigeria LNG’s gas output.
source: clubofmozambique.com
African Energy Council