In a landmark decision that underscores Nigeria’s evolving energy landscape, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has greenlit a $510 million divestment deal by TotalEnergies, a leading French oil and gas multinational. This transaction marks a significant shift in the ownership structure of Oil Mining Lease (OML) 118, which houses the prolific offshore Bonga field, one of Nigeria’s most strategic deepwater assets. Under the terms of the deal, TotalEnergies will fully exit its 12.5 per cent stake in OML 118, with Shell Nigeria Exploration and Production Company (SNEPco) and Nigerian Agip Exploration (NAE) stepping in to acquire the divested interest. This move not only reshapes the ownership dynamics of a key oil-producing asset but also signals renewed confidence in Nigeria’s offshore oil and gas sector amid ongoing regulatory reforms and market realignments.
Details of the Divestment Deal
The divestment agreement, valued at $510 million, sees Shell acquiring a 10 per cent stake in OML 118 for $408 million, while Agip secures the remaining 2.5 per cent for $102 million. This transaction significantly bolsters Shell’s position in the Bonga field, elevating its stake to 65 per cent and reinforcing its dominance as the operator of one of Nigeria’s most productive deepwater assets. Agip, on the other hand, strengthens its foothold in the Nigerian offshore sector with its acquisition of the smaller but strategically important 2.5 per cent stake.
The Bonga field, located approximately 120 kilometers off the Nigerian coast in water depths exceeding 1,000 meters, is a cornerstone of Nigeria’s deepwater oil production. Discovered in 1996 and operated by Shell, the field has been a critical contributor to Nigeria’s crude oil output since production commenced in 2005. With a production capacity of approximately 200,000 barrels of oil per day, Bonga remains a vital asset in Nigeria’s upstream sector, which accounts for a significant portion of the country’s foreign exchange earnings. The field’s strategic importance cannot be overstated, as it represents a high-value, low-sulfur crude oil asset that aligns with global demand for cleaner energy sources.
The NUPRC’s approval of the divestment is contingent upon ministerial consent, a procedural requirement under Nigeria’s regulatory framework. Additionally, the buyers—Shell and Agip—are obligated to assume all decommissioning, abandonment, and community obligations associated with TotalEnergies’ divested stake. These obligations include environmental remediation, infrastructure decommissioning at the end of the asset’s lifecycle, and commitments to the host communities in line with Nigeria’s local content policies. Furthermore, Shell and Agip will collectively pay a 7 per cent premium and processing fees on the deal value, a financial requirement that underscores the regulatory oversight and fiscal considerations embedded in such transactions.
NUPRC’s Rigorous Evaluation Process
The NUPRC’s approval of the transaction highlights its rigorous evaluation process, designed to ensure that only technically and financially capable entities take control of Nigeria’s critical upstream assets. In its statement, the regulator emphasized that both Shell and Agip demonstrated the requisite technical expertise and managerial capacity to operate and manage OML 118 effectively. Shell, as the operator of the Bonga field since its inception, brings decades of experience in deepwater exploration and production, coupled with a proven track record of managing complex offshore projects in Nigeria. Agip, a subsidiary of Italy’s Eni, has similarly established itself as a reliable player in Nigeria’s upstream sector, with significant investments in both onshore and offshore assets.
The approval process involved a comprehensive assessment of the buyers’ operational capabilities, financial health, and compliance with Nigeria’s regulatory requirements. This included evaluating their plans for sustaining production, adhering to environmental standards, and fulfilling community obligations. The NUPRC’s thorough vetting process reflects its mandate to safeguard Nigeria’s interests in the upstream sector while fostering a competitive and sustainable oil and gas industry.
Shell’s Strategic Pivot to Offshore Operations
The acquisition of TotalEnergies’ stake in OML 118 underscores Shell’s renewed commitment to Nigeria’s offshore oil and gas sector. This move comes on the heels of Shell’s recent divestment of its onshore assets to Renaissance, a consortium comprising four Nigerian firms—ND Western, Aradel Energy, First E&P, and the Waltersmith Group—alongside an international partner. The $1.3 billion onshore divestment, completed earlier in 2025, marked Shell’s strategic exit from Nigeria’s volatile onshore oilfields, which have been plagued by challenges such as oil theft, vandalism, and community unrest.
By contrast, Nigeria’s offshore sector offers a more stable operating environment, with fewer security risks and greater potential for high-yield production. Shell’s increased stake in the Bonga field aligns with its global strategy of prioritizing deepwater assets, which are seen as more resilient to market fluctuations and geopolitical risks. The Bonga field, in particular, is a flagship asset for Shell, boasting advanced infrastructure such as the Bonga Floating Production Storage and Offloading (FPSO) vessel, which has a storage capacity of 2.25 million barrels of crude oil. The FPSO’s ability to process and export large volumes of oil underscores the field’s operational efficiency and its role as a cornerstone of Shell’s portfolio in Nigeria.
Shell’s pivot to offshore operations also reflects broader trends in Nigeria’s upstream sector, where international oil companies (IOCs) are increasingly divesting from onshore assets to focus on deepwater and ultra-deepwater projects. This shift is driven by several factors, including the high capital intensity of deepwater operations, the potential for significant returns, and the relative insulation from local challenges such as pipeline vandalism and militancy. For Shell, the acquisition of an additional 10 per cent stake in OML 118 positions it to maximize returns from a proven asset while reinforcing its long-term commitment to Nigeria’s energy sector.
Agip’s Strategic Expansion
For Agip, the acquisition of a 2.5 per cent stake in OML 118 represents a strategic opportunity to expand its presence in Nigeria’s deepwater sector. While Agip’s stake is smaller than Shell’s, it provides the company with a foothold in one of Nigeria’s most productive offshore fields, enhancing its portfolio diversification. Agip, through its parent company Eni, has a long history of operations in Nigeria, with significant investments in assets such as the Agbara and Abo fields. The acquisition aligns with Eni’s global strategy of focusing on high-value upstream projects while maintaining a strong commitment to environmental and social responsibilities.
Agip’s participation in the deal also underscores the growing collaboration between IOCs in Nigeria’s upstream sector. By partnering with Shell, Agip benefits from the operational expertise and infrastructure already in place at the Bonga field, reducing its capital expenditure while gaining access to a high-performing asset. This collaborative approach is increasingly common in Nigeria’s deepwater sector, where the complexity and cost of projects often necessitate partnerships between multiple stakeholders.
Regulatory Oversight and the Revocation of TotalEnergies’ Previous Deal
The NUPRC’s approval of the TotalEnergies divestment comes against the backdrop of heightened regulatory scrutiny in Nigeria’s upstream sector. In a related development, the NUPRC recently revoked its earlier approval of TotalEnergies’ planned $860 million asset sale to Mauritius-based Chappal Energies. The revocation was due to the failure of both parties to meet the financial obligations required to finalize the transaction. This decision highlights the NUPRC’s commitment to enforcing strict compliance with regulatory requirements, ensuring that only credible and financially capable entities acquire Nigeria’s upstream assets.
The revocation of the Chappal Energies deal also reflects the challenges associated with divestments in Nigeria’s oil and gas sector. While divestments offer opportunities for local and international firms to acquire stakes in high-value assets, they are often subject to complex regulatory processes, financial hurdles, and stakeholder concerns. The NUPRC’s decision to prioritize financial and technical capacity in approving divestments is aimed at safeguarding Nigeria’s economic interests and ensuring the long-term sustainability of its oil and gas industry.
Implications for Nigeria’s Upstream Sector
The approval of TotalEnergies’ $510 million divestment has far-reaching implications for Nigeria’s upstream oil and gas sector. First, it reinforces the attractiveness of Nigeria’s deepwater assets to global investors, despite the challenges facing the country’s broader energy sector. The Bonga field, with its significant production capacity and advanced infrastructure, remains a prime target for IOCs seeking to capitalize on Nigeria’s vast hydrocarbon resources.
Second, the transaction highlights the growing trend of IOCs divesting from onshore assets in favor of offshore projects. This shift is driven by a combination of operational, security, and economic factors, including the high cost of managing onshore assets amid persistent challenges such as oil theft and community unrest. By focusing on offshore assets, IOCs like Shell and Agip can leverage their technical expertise and financial resources to maximize returns while minimizing exposure to local risks.
Third, the deal underscores the critical role of the NUPRC in regulating Nigeria’s upstream sector. The regulator’s rigorous evaluation process and emphasis on technical and financial capacity ensure that only qualified entities acquire strategic assets like OML 118. This approach not only protects Nigeria’s economic interests but also fosters investor confidence by providing a transparent and predictable regulatory environment.
Community and Environmental Obligations
A key aspect of the divestment deal is the requirement for Shell and Agip to assume all decommissioning, abandonment, and community obligations tied to TotalEnergies’ divested stake. These obligations are a critical component of Nigeria’s regulatory framework, which seeks to balance economic development with environmental sustainability and social responsibility.
Decommissioning and abandonment obligations involve the safe and environmentally responsible closure of oil and gas facilities at the end of their productive life. This includes dismantling infrastructure, plugging wells, and remediating environmental impacts to ensure that the site is restored to a safe and sustainable condition. Given the high environmental risks associated with deepwater operations, these obligations are particularly significant for the Bonga field, where any mishap could have severe ecological consequences.
Community obligations, on the other hand, relate to the commitments made to host communities under Nigeria’s local content policies. These policies mandate that oil and gas companies engage with local communities, provide economic opportunities, and contribute to social development initiatives. For Shell and Agip, fulfilling these obligations will require ongoing engagement with stakeholders in the Niger Delta region, where the Bonga field is located, to ensure that the benefits of oil production are shared equitably.
Economic and Strategic Significance
From an economic perspective, the $510 million divestment deal represents a significant inflow of capital into Nigeria’s oil and gas sector. The transaction not only generates revenue for TotalEnergies but also contributes to Nigeria’s economy through taxes, royalties, and the 7 per cent premium and processing fees paid by Shell and Agip. These funds can be reinvested in critical areas such as infrastructure development, education, and healthcare, supporting Nigeria’s broader economic diversification efforts.
Strategically, the deal strengthens Nigeria’s position as a leading destination for deepwater oil and gas investments in Africa. Despite global trends toward renewable energy, oil and gas remain critical to Nigeria’s economy, accounting for over 80 per cent of export earnings and a significant portion of government revenue. The continued interest of IOCs like Shell and Agip in Nigeria’s offshore assets underscores the country’s enduring relevance in the global energy market.
Moreover, the transaction aligns with Nigeria’s broader energy transition goals. While the country remains heavily dependent on hydrocarbons, the government has outlined plans to leverage oil and gas revenues to fund investments in renewable energy and infrastructure. By ensuring that divestments like the TotalEnergies deal are executed transparently and responsibly, the NUPRC is laying the groundwork for a more sustainable and diversified energy future.
Challenges and Opportunities Ahead
While the approval of the TotalEnergies divestment is a positive development, it also highlights the challenges facing Nigeria’s upstream sector. The revocation of the Chappal Energies deal serves as a reminder of the financial and regulatory hurdles that can derail divestment transactions. For local firms seeking to acquire divested assets, securing financing and meeting regulatory requirements remain significant obstacles. The NUPRC’s emphasis on financial capacity suggests that only well-funded and credible entities will succeed in acquiring high-value assets like OML 118.
At the same time, the deal presents opportunities for Nigeria to strengthen its position in the global energy market. By fostering a competitive and transparent upstream sector, the country can attract further investment from IOCs and local players alike. The success of the TotalEnergies divestment could serve as a blueprint for future transactions, demonstrating the potential for mutually beneficial partnerships between regulators, IOCs, and local stakeholders.
Conclusion
The NUPRC’s approval of TotalEnergies’ $510 million divestment in OML 118 marks a pivotal moment for Nigeria’s upstream oil and gas sector. By enabling Shell and Agip to acquire TotalEnergies’ stake in the Bonga field, the regulator has reinforced Nigeria’s attractiveness as a destination for deepwater investments while ensuring that only technically and financially capable entities take control of critical assets. The transaction not only strengthens Shell’s dominance in the Bonga field but also enhances Agip’s presence in Nigeria’s offshore sector, signaling a broader trend of IOCs prioritizing deepwater projects.
As Nigeria navigates the complexities of its energy transition, the successful execution of divestments like this one will be critical to sustaining economic growth and fostering investor confidence. By balancing regulatory oversight with market-driven opportunities, the NUPRC is playing a pivotal role in shaping the future of Nigeria’s oil and gas industry. For Shell, Agip, and other stakeholders, the acquisition of TotalEnergies’ stake in OML 118 represents a strategic opportunity to capitalize on one of Nigeria’s most valuable assets while contributing to the country’s long-term development goals.
