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Sopuruchi Onwuka
Government has approved the deal by TotalEnergies to sell off its 12.5 interest in the deepwater Oil Mining Lease (OML) 118 to Shell Nigerian Exploration and Production Company (SNEPCO) Limited and the Nigeria Agip Exploration (NAE).
Nigerian Upstream Petroleum Regulatory Commission (NUPRC) which administers oil blocks in the country declared Thursday evening that TotalEnergies has effectively sold its interest in the prolific deepwater block to its partners.
The Sales Purchase Agreement (SPA), according to the NUPRC, assigned additional 10 percent to SNEPCO and the remaining 2.5 percent interest to NAE.
Oracle Intelligence reports that SNEPCO operates the production sharing agreement governing oil and gas exploration and production in the leased acreage currently hosting prolific Bonga oilfields some of which are already in production for 20 years.
Nigeria’s major oil blocks including deepwater OML 118
Italy’s Eni which owns the Agip affiliates in Nigeria is partner to Shell and TotalEnergies in the Production Sharing Contract with the Nigerian National Petroleum Company (NNPC) Limited which is the concessionaire of the oil block.
TotalEnergies exit is coming at critical moment when the partners and government agencies have reached closure on new development investments that would see production boost from the assets.
The closing of the deepwater divestment also appears compensatory after the NUPRC withdrew earlier approval for TotalEnergies’ $860 million asset sale to Mauritius-based Chappal Energies because the two sides had not met financial commitments required to complete the deal.
Details of the agreement provided by the NUPRC holds that TotalEnergies would transfer 10 percent of its interest to SNEPCO at a cost of $408 million while NAE would pay $102 million for the remaining 2.5 percent.
The NUPRC said that it has carried out due diligence on SNEPCO pursuant to Section 95 of the Petroleum Industry Act 2021, 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,” NUPRC said.
The commission further stated that TotalEnergies, a committed operator in Nigeria’s vibrant upstream sector, had also paid the statutory application fee for the deal. It added that SNEPCO and NAE would bear the decommissioning and abandonment liabilities owed by TotalEnergies to the Federal Government of Nigeria with respect to the divested interest.
The upstream regulator 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.
Following the financial transactions relating to the acquisition, NUPRC demands that SNEPCO and NAE to pay 5 percent and 2 percent respectively of the transaction value on the $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,” the NUPRC declared.
