The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has officially cancelled the sale of TotalEnergies’ $860 million asset portfolio due to Chappal Energies’ failure to fulfil its financial commitments under the transaction. This development introduces significant uncertainty into the ownership and operational future of critical oil and gas licences previously held by TotalEnergies.
The sale agreement, signed in July 2024, involved TotalEnergies EP Nigeria transferring its 10 per cent participating interest in the Shell Petroleum Development Company (SPDC) Joint Venture licences in Nigeria to Chappal Energies.
These licences include OML 23, OML 28, and OML 77, predominantly gas-producing assets responsible for about 40 per cent of Nigeria LNG’s gas supply.
TotalEnergies, however, was to retain full economic interest in these licences despite the operational transfer.
Confirming the cancellation, Head of Media and Strategic Communications at NUPRC, Eniola Akinkuotu, explained that it was solely due to Chappal Energies’ inability to meet its financial obligations. “It’s not both sides that defaulted, it’s Chappal Energies that didn’t meet their obligation. TotalEnergies met its,” Akinkuotu emphasised.
He detailed the sequence of events, noting that although the sale initially gained ministerial consent, the expected payments were never made. “When the sale was approved and ministerial consent was granted, money was supposed to be paid to TotalEnergies, and subsequently, certain proceeds were to be remitted to the Nigerian government. This never happened,” Akinkuotu said. “When it didn’t happen, it became clear that Chappal never released the funds.”
The decision to rescind the previous approval puts TotalEnergies back in a complicated position regarding its stakes in SPDC Joint Venture licences. This sector has long been challenged by frequent oil spills linked to theft, sabotage, and operational inefficiencies, which have inflicted high repair costs and environmental liabilities.
An additional source close to the matter told BusinessDay that Chappal Energies failed to raise the $860 million required to finalise the purchase from TotalEnergies. The source also revealed concerns about TotalEnergies’ compliance with regulatory obligations. “TotalEnergies also failed to settle regulatory fees and set aside adequate provisions for environmental rehabilitation and future liabilities,” the source said.
The source expressed hope for a timely resolution, adding, “I hope this issue is resolved on time and doesn’t affect TotalEnergies’ pending investments.”
The withdrawal of Chappal Energies from the deal underscores ongoing difficulties in Nigeria’s upstream oil and gas sector, particularly in financing asset acquisitions and managing complex environmental and regulatory demands. Industry stakeholders will closely watch the outcome of this cancellation, as it may impact future transactions and operational stability within the SPDC Joint Venture licences.
