French multinational energy firm TotalEnergies has revealed that it will divest its minority stake in Nigeria’s OML 118 Production Sharing Contract (PSC). The company announced that its local subsidiary, TotalEnergies EP Nigeria, has agreed to sell its 12.5% non-operated interest in the offshore oil block to Shell Nigeria Exploration and Production Company Ltd (SNEPCo) for a transaction value of $510 million.

This strategic move aligns with TotalEnergies’ broader portfolio realignment, which aims to prioritize assets with lower costs and emissions while strengthening its position in operated offshore and gas projects in Nigeria.

Deal Centers Around Bonga Oilfield

The asset at the center of this transaction is the prolific OML 118 oil block, which includes the Bonga field—Nigeria’s first deepwater oilfield, located approximately 120 kilometers south of the Niger Delta. The field began producing oil in 2005 and has since become a critical component of Nigeria’s offshore energy output.

The block also includes Bonga North, a new development that commenced in 2024. Shell has committed significant investments to this extension, and the acquisition of TotalEnergies’ stake strengthens its long-term commitment to deepwater exploration in Nigeria.

Once this deal concludes, Shell’s share in the OML 118 block will increase to 67.5%, up from the current 55%, further consolidating its leadership role in Nigeria’s offshore sector.

Regulatory Approvals Pending for Completion

While the companies have reached an agreement, the sale remains contingent on customary conditions, including obtaining all necessary regulatory clearances from Nigerian authorities. Both companies have expressed confidence that the transaction will proceed smoothly.

In its official statement, TotalEnergies noted that production from the block contributed approximately 11,000 barrels of oil equivalent per day (boe/d) to its output in 2024, underscoring its strategic importance.

OML 118 is currently operated by SNEPCo, with equity interests distributed as follows:

• Shell (SNEPCo) – 55% (to rise to 67.5%)

• Esso Exploration and Production Nigeria – 20%

• TotalEnergies EP Nigeria – 12.5% (to be transferred)

• Nigerian Agip Exploration – 12.5%

Strategic Shift: Focusing on Gas and Operated Assets

According to Nicolas Terraz, President of Exploration and Production at TotalEnergies, this divestment is part of the company’s long-term approach to refocus its energy operations.

“TotalEnergies is continuously optimizing its upstream portfolio. Our priority is to invest in assets with lower operational costs and reduced carbon emissions. In Nigeria, our emphasis is now on gas developments and offshore assets under our own operational control, including the Ubeta project, which will support gas supply to the Nigeria LNG plant,” Terraz said.

The Ubeta gas project, currently under development, highlights TotalEnergies’ ongoing investment in Nigeria’s gas infrastructure. This supports the country’s ambitions to boost LNG exports and utilize gas as a transition fuel.

TotalEnergies’ Deep Roots in Nigeria

TotalEnergies has operated in Nigeria for over six decades, employing more than 1,800 personnel across its various business operations. The country remains one of the company’s most vital contributors, with 209,000 boe/d produced in 2024. The company also operates a robust downstream retail network, which includes over 540 service stations nationwide.

Despite this divestment, TotalEnergies reaffirmed its long-term commitment to Nigeria, especially through investments that promote sustainable energy and local community development.

Shell Strengthens Offshore Presence with Bold Acquisition

Shell’s acquisition of the additional 12.5% stake reaffirms its bullish outlook on Nigeria’s offshore oil prospects. In December 2024, Shell announced the final investment decision (FID) for the Bonga North project, which will be tied back to its existing Floating Production Storage and Offloading (FPSO) facility at the original Bonga site.

The Bonga North field is projected to deliver over 300 million barrels of oil equivalent and is expected to hit a peak output of 110,000 barrels per day. First oil from the development is anticipated by the end of the decade.

Commenting on the acquisition, Peter Costello, Shell’s President of Upstream, stated:

“This investment follows our commitment to Bonga North. It reflects our belief in the long-term viability of Nigeria’s deepwater resources and strengthens our upstream growth in the region.”

A Win-Win for Nigeria’s Oil Sector

This transaction is emblematic of the broader reshuffling within Nigeria’s oil industry. As Shell retreats from onshore assets—recently selling them to a consortium of local firms and an international energy group under Renaissance—it is doubling down on offshore operations, which face fewer security disruptions and offer more scalable investment opportunities.

At the same time, TotalEnergies is streamlining its focus on cleaner, more efficient energy sources and retaining high-value projects that align with its sustainability goals.

Both companies’ moves reflect the changing dynamics in Nigeria’s oil sector, which is navigating challenges such as environmental concerns, security risks in the Niger Delta, and the push for an energy transition.