TotalEnergies SE has agreed to sell a 40 percent interest in a Nigerian offshore block to South Atlantic Petroleum Ltd., clearing the way for an appraisal campaign next to one of its biggest producing assets in the country.
The French oil major signed a farm-out agreement with the Nigerian company, known as SAPETRO, covering block OPL257, it said in a statement. Financial terms weren’t disclosed.
When the deal closes, TotalEnergies will keep a 50 percent stake and stay operator of the block. SAPETRO will hold 40 percent and Conoil the remaining 10 percent.
OPL257 sits about 150 kilometers (93 miles) off the Nigerian coast. It borders block PPL261, where TotalEnergies holds 24 percent and where it and its partners, SAPETRO among them, found the Egina South field in 2005.
The discovery runs across the boundary between the two blocks, so the part on the OPL257 side has to be assessed before anyone can say how big the field is or whether it can be produced economically.
That work is planned for the coming months. If the results hold up, the companies would develop Egina South as a tie-back to the Egina floating production, storage and offloading vessel, which is about 30 kilometers away.
A tie-back connects a new field to a platform or vessel that already exists, so the partners avoid paying for a standalone facility. It is generally one of the cheaper ways to bring offshore oil to market.
“TotalEnergies is pleased to have SAPETRO as a partner in OPL257 as well as in the adjacent PPL261 block,” said Mike Sangster, senior vice president for Africa exploration and production at TotalEnergies. “Consolidating our long-term partnership paves the way for a quick appraisal campaign and subsequent development of Egina South in the success case.”
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Sangster said the transaction fits the company’s strategy of developing “low-cost, low-emission resources while leveraging existing facilities.”
The statement said completion is subject to customary conditions, including regulatory approvals. It didn’t say when the deal is expected to close or when the first appraisal well might be drilled.
Why it matters
For TotalEnergies, the sale cuts its exposure to a block where the resource is still unproven while keeping operatorship and a majority share.
Bringing in a partner that already sits alongside it in PPL261 also means one group of companies on both sides of the line. That should make it simpler to coordinate appraisal, share data and agree on a development plan if the discovery proves commercial.
SAPETRO gets a larger position in an area it already knows. The company is a partner in PPL261 and now steps up to a 40 percent share in the neighboring block, giving it a bigger stake in any Egina South development.
The deal also reflects a wider pattern in West Africa’s offshore sector. Large international companies have been trimming or reshuffling positions in some assets while concentrating capital on projects that can use existing infrastructure and offer lower costs and lower emissions per barrel. Local and regional companies have been taking on more of the early-stage exposure, often alongside an experienced operator.
Nigeria remains one of Africa’s largest oil producers, and deepwater fields have been central to efforts to lift output after years of decline and disruption in onshore and shallow-water areas. Projects that plug into existing vessels have an advantage because they can start production sooner and cost less than greenfield developments.
What to watch
Several things will determine how this plays out. Regulators in Nigeria will have to approve the transfer of the interest before it takes effect. The appraisal results will show whether the part of Egina South in OPL257 holds enough recoverable oil to justify tying it back. Timing will also matter, since the Egina vessel’s capacity and the pace of other development work will affect how quickly any new volumes could be processed.
Neither company has given reserve estimates for Egina South, and the statement made no commitments on development timing or spending. Sangster’s reference to a “success case” signals that no investment decision has been taken and that appraisal could still disappoint.
TotalEnergies didn’t say how much it expects to receive from the sale or whether it will book a gain. SAPETRO and Conoil didn’t immediately provide further comment.
Dipo Oladehinde is a skilled energy analyst with experience across Nigeria's energy sector alongside relevant know-how about Nigeria’s macro economy. He provides a blend of market intelligence, financial analysis, industry insight, micro and macro-level analysis of a wide range of local and international issues as well as informed technical rudiments for policy-making and private directions.