(3 Minutes Read)
French oil major TotalEnergies EP Nigeria announced that it has signed a sale and purchase agreement with Chappal Energies to sell its 10% interest in Shell Petroleum Development Company of Nigeria (SPDC) Joint Ventures.
The onshore assets will be sold to the indigenous oil company for USD 860 million as the agreement is set to be finalised by December 31, 2024. This represents the oil company’s strategic move to divest from Nigeria’s onshore segment in favour of a more secure offshore environment. The transaction involves acquiring a 10% stake in 15 oil mining leases and owning the Forcados and Bonny export terminals, critical assets within the SPDC joint venture.
As stated, Chappal’s financing will come from an entity affiliated with TotalEnergies or a financial institution chosen by the French company. Trading firm Trafigura and a consortium of global banks are also contributing funds. The French firm continues to actively manage its portfolio in Nigeria, which aligns with its strategy to focus on its offshore oil and gas assets.
After the launch of the Ubeta gas development on the OML58 license last month, this divestment of TotalEnergies EP Nigeria’s interest in SPDC JV licenses allows the company 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. Shell had also reached an agreement to sell SPDC to Renaissance, a consortium of five mostly local companies, for up to USD 2.4 billion. The consortium comprises four exploration and production companies based in Nigeria and an international energy group.
However, experts raised concerns about communities that have experienced environmental degradation as a result of oil spillage in the Niger Delta, questioning the ethics of abandoning environmental damage. They added the need for stakeholders across government and business to engage in constructive dialogue to chart a path towards a more resilient and inclusive energy future for Nigeria. The sale would give the company additional funds to pay down debt, expand into new areas, or invest in alternative energy. He said for the host community, the sale of the assets would impact the local economy and job prospects in operational zones where TotalEnergies is based.
The buyer’s goals and the assets they want to use may need modifications to employment numbers, business procedures, and community engagement programs. The effects that the new owner’s activities will have on the environment and society, as well as any modifications to the previously implemented corporate social responsibility initiatives, could also be of concern.
Read Also:
https://trendsnafrica.com/totalenergies-to-exit-nigeria-onshore-oil-business/
https://trendsnafrica.com/totalenergies-raises-its-stakes-in-africa-power-plants/
The sales of the assets reflect the dynamics and evolution of Nigeria’s economic climate, especially in the oil industry. The uncertainties and changes in regulatory policies, security challenges, oil theft, reputation and operational complexities would have influenced the decision of TotalEnergies to divest their onshore assets.
