Nigerian regulator pulls approval for TotalEnergies' $860 million asset sale to Chappal Energies
News Summary
TotalEnergies' sale of a minority stake in a Nigerian onshore oil producer to Chappal Energies has fallen through, Nigerian regulators announced. The Nigerian Upstream Petroleum Regulatory Commission withdrew its approval, initially granted last October, because both parties failed to meet the financial commitments required to complete the deal. Reportedly, Chappal Energies failed to raise the $860 million, which in turn meant TotalEnergies did not fulfill its obligation to pay regulatory fees and cover funds for environmental rehabilitation and future liabilities. This failed transaction represents a setback for TotalEnergies' strategy to divest mature, polluting assets and reduce its debt, which had surged 89% to $25.9 billion in the year to July. Other major oil companies, including Shell, Exxon Mobil, Eni, and Equinor, have also divested their Nigerian assets in recent years. Shell, for example, successfully sold its 30% stake in Shell Petroleum Development Company of Nigeria Limited (SPDC) to a consortium of mostly local companies for up to $2.4 billion in March.
Background
TotalEnergies has been pursuing a strategy to divest high-cost, polluting onshore oil assets to optimize its portfolio and reduce debt. Onshore oil fields in Nigeria, particularly in the Niger Delta region, present significant operational challenges and environmental liabilities due to hundreds of oil spills resulting from theft, sabotage, and operational issues, leading to costly repairs and clean-ups. In recent years, several major international oil companies, including Shell, Exxon Mobil, Eni, and Equinor, have also divested their Nigerian onshore assets to focus on newer, more profitable operations elsewhere. Chappal Energies, specializing in producing oil and gas from mature and distressed upstream assets in the Niger Delta, successfully acquired Nigerian assets from Equinor for $1.2 billion last year, with financial backing from Mauritius Commercial Bank and commodities trader Trafigura.
In-Depth AI Insights
What does this failed deal reveal about the true complexities and risks of divesting onshore assets in challenging regions like the Niger Delta, beyond superficial