French energy giant TotalEnergies appears to be following in the footsteps of Shell, considering an exit from Nigeria’s onshore oil sector.
This potential move comes less than a month after Shell sold its Nigerian onshore subsidiary, the Shell Petroleum Development Company of Nigeria (SPDC), to a consortium of five companies based in Nigeria and one in Switzerland, for up to £2.4 billion.
“We want to divest our share of SPDC, and we are looking to reshape the portfolio,” Patrick Pouyanne, CEO of TotalEnergies said at the company’s annual results presentation on Wednesday.
“Fundamentally it’s because producing this oil in the Niger Delta is not in line with our [Health, Security and Environmental] policies, it’s a real difficulty.”
Exxon Mobil XOM.N, Eni ENI.MI and Norway’s Equinor EQNR.OL have sold assets in Nigeria in recent years to focus on newer, more profitable operations elsewhere.
Pouyanne said TotalEnergies would keep its Nigerian gas resources, which he described as crucial for the company’s planned expansion of liquefied natural gas development in coming years.
Analysts suggest this trend of major oil companies exiting the onshore sector could have significant implications for Nigeria’s economy.
The oil sector remains a crucial source of revenue for the government and onshore production accounts for a substantial share of the country’s total output. The potential loss of investment and expertise could hinder the development of the sector and impact government finances.
However, some experts believe the exit could also present an opportunity for local companies to step in and acquire valuable assets. The sale of Shell’s assets has already demonstrated interest from Nigerian players, and TotalEnergies’ potential exit could further open the door for domestic investment.