FG Approves $510m TotalEnergies Deal with Shell, Agip after Chappal Energies Failure
- The Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has approved the sale of a 12.5% stake in OML 118 TO Shell and Agip
- According to reports, TotalEnergies will transfer 10% of its interest in Shell at $480 million, while Agip will pay $102 million for the remaining 2.5%.
- NUPRC said it has conducted due diligence on the two oil firms and seen that they are financially sound to undertake the project
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Pascal Oparada, a reporter for Legit.ng, has over ten years of experience covering technology, energy, stocks, investment, and the economy.
The Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has authorised the Sales Purchase Agreement (SPA) by TotalEnergies Exploration and Production Nigeria Limited to assign its 12.5% contractor interest in OML 118 to Shell Nigeria and Agip.
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The $510m deal aligns with PIA
The deal comes two days after the commission terminated Chappal Energies' acquisition of TotalEnergies’ 10% stake in Shell.
Details of the deal show that TotalEnergies will transfer 10% of its interest in Shell at $480 million, while Agip will pay $102 million for the remaining 2.5%.
According to a report by The Nation, the head of media and strategic communications at NUPRC, Eniola Akinkuotu, said the deal aligns with Section 95 of the Petroleum Industry Act (PIA).
He said NUPRC conducted due diligence on Shell to know its financial capacity and technical competence before signing off on the deal.
The statement by the commission’s spokesperson said that Shell and Agip have shown technical and managerial competence to contribute optimally to Nigeria’s upstream operations in OML 118.
Agip and Shell to bear decommissioning costs
He asserted that the two oil giants already maintain participating interests in the assets.
“Based on the presentations and documents submitted, there is a clear evidence that they have access to funding to meet their financial obligations,” the Commission said.
The agency disclosed that TotalEnergies had also paid the required application fee for the deal
The upstream regulator disclosed that Shell and Agip will shoulder the decommissioning and abandonment liabilities owed by TotalEnergies to the Nigerian government regarding the divestment.
NUPRC revealed that the divestment is subject to approval by the minister according to PIA’s provisions.
The commission said it expects the parties to pay 5% and 2% respectively of the transaction purse of $510 million as a premium for ministerial consent and processing fees.
The parties are also expected to sign an undertaking backing the NUPRC that they will bear all decommissioning and abandonment liabilities and the host community liabilities owed by TotalEnergies.
NUPRC terminates Chappal Energies deal
The Nigerian upstream sector received a shock this week when NUPRC announced the cancellation of the Chappal Energies-TotalEnergies deal.
The regulator cited financial infractions by Chappal Energies for the deal’s termination.
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Experts have said the renewed interest in Nigeria’s oil assets by International Oil Companies (IOCs) is a major boost for the country.
They cited reforms in the oil sector as the reason for the interest resurgence.
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These players store, distribute, and move millions of litres of fuel daily, ensuring petrol stations and the economy keep running.
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Source: Legit.ng
