The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has officially revoked its previously granted approval for TotalEnergies' intended sale of a minority interest in an onshore oil production venture within Nigeria. This regulatory reversal directly impacts TotalEnergies' strategic efforts to shed older assets and alleviate its financial liabilities. The initial agreement, struck in July of the previous year, involved TotalEnergies' plan to transfer a 10% share in a joint venture to Telema Energies Nigeria, a company controlled by Mauritius-based Chappal Energies. However, the transaction faltered due to the inability of the involved parties to fulfill necessary financial obligations, leading to the regulatory body's decision to withdraw its consent.
The NUPRC's decision to retract its approval for the sale of TotalEnergies' stake in a Nigerian onshore oil joint venture highlights significant compliance issues. This particular joint venture includes key players such as the Nigerian National Petroleum Company and Shell Petroleum Development Company of Nigeria. The proposed sale encompassed several oil mining leases, forming a critical component of TotalEnergies' broader strategy to divest its onshore oil interests in the region. Initially, regulatory consent was granted in October of the preceding year, but it was subsequently withdrawn after the parties involved failed to meet the stipulated financial requirements essential for the transaction's completion.
A spokesperson for the Nigerian Upstream Petroleum Regulatory Commission, Eniola Akinkuoto, emphasized that the ministerial consent for the transaction was contingent upon specific financial commitments to the Nigerian populace, accompanied by strict deadlines. Despite multiple extensions being provided, both TotalEnergies and Chappal Energies, the prospective buyer, failed to honor these financial obligations. Consequently, the commission was compelled to nullify the agreement. Sources close to the negotiations, as reported by Reuters, indicated that Chappal Energies encountered difficulties in securing the necessary $860 million in funding, which ultimately prevented Total from fulfilling its own responsibilities, such as paying regulatory fees and allocating funds for environmental restoration and future liabilities associated with the assets.
This event follows TotalEnergies' recent agreement in May to sell its 12.5% non-operated interest in the OML 118 production sharing contract to Shell Nigeria Exploration and Production Company for a sum of $510 million. The current withdrawal of approval by the NUPRC for the sale to Chappal Energies underscores the rigorous regulatory environment in Nigeria and the importance of adhering to all financial and procedural requirements in major energy asset transactions. The inability to secure funding and meet financial commitments proved to be the decisive factor in the regulatory body's decision, leaving TotalEnergies' broader divestment strategy in the region facing unexpected obstacles.
The Nigerian regulatory body's annulment of the asset sale approval to Telema Energies Nigeria underscores the critical importance of financial adherence in significant oil and gas transactions. This action demonstrates the NUPRC's firm stance on compliance, ensuring that all parties involved in such deals meet their obligations to the state and its citizens. The failure to secure the required $860 million by Chappal Energies, despite extensions, ultimately led to the undoing of a key part of TotalEnergies' divestment plan, reinforcing the strict oversight governing Nigeria's upstream petroleum sector.