The Nigerian Upstream Petroleum Regulatory Commission has given its backing to TotalEnergies’ complete withdrawal from Oil Mining Lease 118, approving a sales purchase agreement that will see the French energy giant’s entire 12.5% contractor interest transferred to existing joint venture partners Shell Nigeria Exploration and Production Company and Nigerian Agip Exploration Limited.
The regulatory approval, announced on Thursday via the Commission’s official social media channels, represents another significant shift in Nigeria’s upstream petroleum landscape, where international oil companies have increasingly sought to divest aging onshore and shallow-water assets in favor of deepwater investments or complete exits from the country.
Under the approved transaction, valued at $510 million, SNEPCo will acquire a 5% stake while NAE takes on 2% of TotalEnergies’ interest in the oil block. Both acquiring companies are already established operators in OML 118, a factor that appears to have influenced the regulator’s decision.
“SNEPco and NAE have demonstrated both technical and managerial competence to optimally contribute to the upstream operations in OML 118,” the Commission stated, highlighting the companies’ existing operational familiarity with the asset as a key consideration in the approval process.
The transaction structure reflects broader industry trends, with established operators consolidating their positions in proven assets rather than bringing in entirely new players. This approach often streamlines operations and reduces regulatory complexity, factors increasingly important in Nigeria’s evolving petroleum sector.
Financial Safeguards and Liability Transfer
A critical component of the deal involves the comprehensive transfer of operational and environmental liabilities from TotalEnergies to the acquiring parties. Both SNEPCo and NAE will assume full responsibility for decommissioning and abandonment obligations – costs that can run into hundreds of millions of dollars for mature oil fields.
The companies will also inherit TotalEnergies’ host community obligations, addressing a key regulatory concern in Nigeria, where community relations can significantly impact operational continuity. The NUPRC emphasized these liability transfers as “critical in ensuring the long-term sustainability of Nigeria’s oil and gas operations, especially in host communities.”
Financial due diligence appears robust, with the regulator confirming that both acquiring companies “provided clear evidence of access to funding, ensuring they can meet their financial obligations in relation to the asset.” This represents a more stringent approach compared to some previous transactions where funding questions later emerged.
Regulatory Hurdles Remain
Despite NUPRC’s approval, the transaction faces additional regulatory steps before completion. Ministerial consent remains required under multiple sections of the Petroleum Industry Act 2021, reflecting the government’s maintained oversight over significant upstream transactions.
The financial implications extend beyond the headline transaction value. SNEPCo and NAE face additional costs totaling $35.7 million – representing 5% and 2% respectively of the deal value – in premium payments for ministerial consent and processing fees. These charges, while standard, underscore the substantial regulatory costs associated with upstream asset transfers in Nigeria.
Both companies must also provide written undertakings affirming their commitment to inherited liabilities, and creating formal accountability mechanisms should operational or environmental issues arise.
Industry Context
The TotalEnergies divestment continues a pattern of international oil company exits from Nigerian onshore and shallow-water operations. Companies, including ExxonMobil, Shell, and others, have either completed or announced similar withdrawals, often citing operational challenges, regulatory complexity, and security concerns.
However, the willingness of SNEPCo and NAE – both with existing Nigerian operations – to expand their positions suggests continued confidence in the country’s petroleum potential among operators with local expertise and established government relationships.
OML 118’s specific production figures and remaining reserves were not disclosed in the regulatory announcement, though the asset’s attractiveness to existing joint venture partners indicates continued commercial viability.
The transaction, once fully approved, will mark another chapter in Nigeria’s upstream sector evolution, balancing foreign operator exits against domestic and regional consolidation efforts aimed at maintaining production levels and operational continuity.
WHAT YOU SHOULD KNOW
TotalEnergies is completely exiting Nigerian oil operations by selling its 12.5% stake in Oil Mining Lease 118 to Shell and Agip for $510 million. This continues the trend of major international oil companies withdrawing from Nigeria’s onshore oil sector, while established local operators consolidate their positions.
Critically, the buyers must assume all environmental cleanup costs and community obligations – potentially worth hundreds of millions more – making this exit part of a broader shift where foreign companies are transferring both assets and long-term liabilities to operators with deeper Nigerian experience.
