TotalEnergies’ (TTEF.PA) plan to sell a minority stake in a Nigerian onshore oil producer has collapsed after regulators withdrew approval for the $860 million deal, Nigerian regulators said on Tuesday, marking a setback to the French energy giant’s strategy to shed mature, polluting assets and reduce debt.
In July 2024, TotalEnergies agreed to sell its 10% interest in Shell Petroleum Development Company of Nigeria Limited (SPDC) to Mauritius-based Chappal Energies.
The transaction was part of a broader wave of divestments by international oil majors offloading onshore Nigerian assets in recent years.
Approval was initially granted last October, but the Nigerian Upstream Petroleum Regulatory Commission has now cancelled it, citing unmet financial obligations, Reuters reported.
“The ministerial consent was accompanied by certain financial obligations to the Nigerian people with strict deadlines. However, both parties failed to meet their financial commitments after repeated extensions, forcing the commission to cancel the deal,” said Eniola Akinkuoto, spokesperson for the commission, on Tuesday.
Chappal Energies and TotalEnergies declined to comment. A source familiar with the talks said Chappal was unable to raise the $860 million needed, which in turn prevented Total from paying regulatory fees and setting aside funds for environmental rehabilitation and future liabilities.
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The failure leaves TotalEnergies tied to its stake in SPDC, a company plagued by hundreds of oil spills linked to theft, sabotage, and operational challenges that have led to expensive repairs.
Earlier this year, in March, Shell (SHEL.L) sold its 30% holding in SPDC to a consortium of five mostly local firms in a deal worth up to $2.4 billion.
Other major oil companies, including Exxon Mobil (XOM.N), Italy’s Eni (ENI.MI), and Norway’s Equinor (EQNR.OL), have also exited Nigerian assets to focus on newer and more profitable operations elsewhere.
Chappal Energies, which specialises in reviving mature and distressed upstream assets in the Niger Delta, successfully completed a $1.2 billion acquisition of Nigerian assets from Equinor last year, backed by Mauritius Commercial Bank and commodities trader Trafigura.
The company did not disclose its financial backers for the proposed purchase from Total. SPDC’s current ownership structure includes the Nigerian National Petroleum Corporation with 55%, TotalEnergies with 10%, and Eni with 5%.
The failed sale is a blow to TotalEnergies’ efforts to offload costly, high-emission assets and reduce its debt burden, which had surged 89% to $25.9 billion in the year to July.
CEO Patrick Pouyanne told investors in July that the Nigerian transaction was one of three planned sales expected to generate $3.5 billion before year-end and lower the company’s debt-to-equity ratio, which stood at 28% at mid-year when including leases and hybrid debt.
As a result, Total remains with its interests in 15 licences covering mostly oil-producing fields that yielded about 14,000 barrels of oil-equivalent per day in 2023, along with three licences in gas fields that supply 40% of its Nigeria LNG commitments.
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Image Credit: Reuters
