Nigeria's top five Oil and Gas deals in 2024 (Updated)

Nigeria, Africa's largest oil exporter, has seen oil majors pull out (divest) of onshore operations citing security concerns, including theft and sabotage, to focus on deepwater (offshore) drilling, which is more profitable and is in line with their environmental, social, and governance (ESG) strategy. Regulatory obstacles, however, have delayed their exits.

On October 21st, 2024, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) , at the launch of the Project 1 million barrels of oil per day initiative, said the divestment exercise was conducted diligently by the commission in line with the provisions of the Petroleum Industry Act (PIA).

The CEO of NUPRC, Engr. Gbenga Komolafe, clarified that four (or 80%) of the five divestment applications for consent that the commission received passed the regulatory test and obtained ministerial consent.

Details of the various divestiture sales are below:

1. TotalEnergies Nigeria completed the sale to Chappal Energies Mauritius Limited of its 10% participating interest and all its rights and obligations in 15 licenses of SPDC JV, which are producing mainly oil; the specific OMLs were not explicitly listed, but production from these licenses represented approximately 14,000 barrels per day, as well as it's 10% participating interest in the 3 other OML's of SPDC JV, which are producing mainly gas (OML 23, OML 28, and OML 77). TotalEnergies retains its economic interest in these gas-producing assets to support its commitment to gas supply for NLNG

The transaction was concluded for a firm consideration of USD 860 million and has received regulatory and ministerial approval.

TotalEnergies has also received regulatory and ministerial approval for a divestiture sale to Telema Energies which includes the sale of Total's 10% stake in its joint venture with the NNPCL in the Oil Mining Lease (OML) 98, which is part of the major deepwater assets operated by TotalEnergies. This transaction was valued at around $1.5 billion.

2. 壳牌 announced in January that it had reached an agreement to sell its Nigerian onshore subsidiary, Shell Petroleum Development Company of Nigeria Limited, to Renaissance for about $1.3-$2.4bn after about a century of operations in the Niger Delta. Renaissance is a consortium consisting of ND Western Limited , Aradel Holdings PLC The Petrolin Group, FIRST Exploration & Petroleum Development Company , and the Waltersmith Group .

This deal involves the sale of Shell's onshore subsidiary, SPDC, which includes a 30% interest in several Oil Mining Leases (OMLs). The OMLs involved are primarily onshore and include:

• Onshore OMLs: 20, 21, 22, 23, 25, 27, 28, 31, 32, 33, 35, 36, 43, 45, and 46.
• Shallow water OMLs: 74, 77, and 79.

The Shell assets hold a combined estimated volume of 6.73 billion barrels of oil and condensate and 56.27 trillion cubic feet of associated and non-associated gas.

This transaction represents a significant shift in Nigeria's oil and gas landscape as Shell reduces its involvement in onshore operations while retaining its focus on deepwater and gas businesses in the country.

In October, the NUPRC rejected the deal for failing to meet regulatory compliance requirements. The regulator noted Renaissance's failure to establish its ability to manage the assets. Concerns over Shell Nigeria's ongoing lawsuits, as well as allegations by 41 civil society organizations led by Amnesty International of human rights violations and environmental degradation in the Niger Delta, have further complicated the agreement.

However, "The Minister of Petroleum Resources has granted approval for the sale of Shell Petroleum Development Company to Renaissance," Renaissance said in a statement on December 18th, 2024.

3. Oando Plc successfully completed the acquisition of 100% of the Nigerian Agip Oil Company (NAOC) from Italian energy giant エニ . The total value of the transaction amounts to $783 million (per. Oando Plc ), which includes both the asset purchase and reimbursement costs. NAOC's participating interest in SPDC JV is not included in the perimeter of the transaction and will remain in Eni’s portfolio. However, the acquisition increases:

• Oando's participating interest in Oil Mining Leases (OMLs) 60, 61, 62, and 63 from 20% to 40%.
• Oando's ownership of the NEPL/NAOC/OOL Joint Venture assets (OMLs 64 and 98), which include the Akpo and Egina fields as well as 38 other oil and gas fields, 24 of which are actively producing. The assets also include roughly 40 identified prospects, 12 production stations, 1,490 kilometers of pipelines, three gas processing plants, and substantial infrastructure, such as the Brass River Oil Terminal and the Kwale-Okpai power plants, which have a combined capacity of 960 megawatts.

This deal has received regulatory and ministerial approval.

4. Seplat Energy Plc 's purchase of 埃克森美孚 's onshore assets, estimated at $800 million, also received regulatory approval, two years after it was first launched. The deal doubles Seplat's production to 120,000 barrels of oil equivalent per day and adds significant assets, including:

• 40% operated interest in OML 67, 68, 70, and 104
• 40% operated interest in the Qua Iboe export terminal and Yoho Floating Storage and Offloading (FSO) unit.
• 51% operated interest in the Bonny River Terminal (BRT)
• NGL recovery plant (9.6% interest)
• Participating interest in the Aneman-Kpono field.

The transaction includes deferred payments of $257.5 million for decommissioning costs and $23 million in transaction-related expenses.

This deal has received regulatory and ministerial approval.

5. Equinor of Norway announced in November that it had reached a deal to sell its local business to Chappal Energies Mauritius Limited . The transaction was performed through Project Odinmim, a special-purpose corporate?vehicle owned by Chappal. Equinor Nigeria Energy owned 53.85% of oil and gas lease OML 128 and a unified 20.21% of the Agbami oil field (OML 127), which is operated by 雪佛龙 Corp. Agbami Oil Field is one of the largest deepwater offshore fields in Nigeria. Despite having its headquarters in Mauritius, Chappal Energies Ltd. is mainly controlled by Nigerians.

This deal has received regulatory and ministerial approval.

Are these deals good for Nigeria?

YES! they are.

Local oil companies like Seplat Energy Plc , Aradel Holdings PLC , and Oando Plc are likely better positioned to operate the acquired assets due to their deep understanding of the local market and regulatory environment. As Nigerian companies, they can focus resources on maximizing efficiency and productivity, allowing for quicker decision-making and adaptation to challenges. Their local presence may also lead to lower operating costs and improved community relations, reducing the risk of disruptions. Additionally, their alignment with local content policies enhances their competitive advantage in managing these assets effectively.

Strategic Implications

1. Shift to Offshore and Deepwater Operations: Oil majors are moving from onshore to offshore operations for higher profitability and alignment with ESG goals, driven by security concerns onshore.
2. Empowering Local Operators: Local companies like Seplat, Oando, and Renaissance gain greater control, increasing efficiency, reducing costs, and improving community relations.
3. Economic Growth and Energy Security: Local investment and increased production contribute to Nigeria’s energy security and the goal of 2.5–3 million barrels per day.
4. Operational Synergies and Efficiency: Consolidated operations lead to economies of scale, enhanced productivity, and better resource allocation, optimizing newly acquired assets.
5. Regulatory and Legal Challenges: Regulatory approvals ensure adherence to the Petroleum Industry Act, but legal challenges (e.g., environmental concerns) could delay or complicate deals.

Opportunities for Local and International Players

1. Opportunities for Local Companies: Local firms can scale operations, grow their portfolios, and leverage local knowledge to reduce costs and improve community relations.
2. Opportunities for International Players: International firms can exit onshore operations, focusing on high-margin deepwater projects while maintaining some exposure through joint ventures.
3. Investment and Infrastructure Development: These transactions may drive investment in critical infrastructure, such as pipelines, terminals, and processing plants, especially with deals like Oando’s acquisition of NAOC assets, which include substantial infrastructure.
4. Technology Transfer and Innovation: International companies’ continued engagement through partnerships and joint ventures can also bring technological expertise to Nigeria’s oil and gas sector, improving efficiency and sustainability in the industry.

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Benjamin Awokumaka

Founder & Managing Consultant, Awoks Consulting