Shell Nigeria Exploration and Production Company Limited (SNEPCo) took a giant stride towards cementing its hold on Nigeria’s deepwater oil sector with the $510 million high-cost acquisition of a Shell Nigeria 12.5 percent stake in Oil Mining Lease 118 (OML 118) from French oil major TotalEnergies.Â
The transaction indicates Shell’s upbeat mood is gaining momentum in Nigeria’s deepwater prospectivity, specifically in the Bonga oilfield, where it already holds over half of the operating rights.
The sale, subject to normal final regulatory approval and closing conditions, will raise Shell’s overall stake in the offshore lease to 67.5 percent from 55 percent. The upgrade falls under Shell’s plan to accelerate Nigerian deep offshore field development as it divests its onshore Nigerian oil assets.
OML 118 holds the highly productive Bonga field, located roughly 120 kilometers south of the Niger Delta. Production in the Bonga field started in 2005 and continued to be Nigeria’s deepwater hub of oil production. Production at the nearby Bonga North field started in 2024 and will come online by the end of the decade. Shell puts reserves in Bonga North at more than 300 million barrels of oil equivalent, to 110,000 barrels per day in the long term.
The acquisition is Shell’s Final Investment Decision (FID) to move forward and develop Bonga North. It will be integrated into its existing fuel oil Bonga Floating Production Storage and Offloading (FPSO) unit, therefore, a strategic offshore business expansion of Shell in Nigeria.
TotalEnergies, which has operated in Nigeria for over sixty years, offered the sale as a master plan to simplify complexity in its upstream portfolio. The business will have fewer operating assets, lower emissions, and stronger finances. Through the sale of its operated holding in OML 118, TotalEnergies intends to invest the sale proceeds into opportunities such as the development of Ubeta gas to the highest degree of supply of the gas to the Nigeria LNG (NLNG) plant.
Nicolas Terraz, President of Exploration and Production at TotalEnergies, noted that TotalEnergies’ strategy in Nigeria is high-efficiency assets, a low environmental footprint, and lower breakeven cash. By selling stakes like Bonga, TotalEnergies is maintaining its Nigerian gas business and downstream footprint, which includes over 540 service stations and 1,800 employees.
Shell’s outright purchase of OML 118 now puts the company firmly in command, with ExxonMobil subsidiary Esso and Nigerian Agip Exploration controlling 20 percent and 12.5 percent stakes, respectively. This comes against the backdrop of the global upstream sector struggling to keep up, producers Shell and TotalEnergies rewriting rulebooks, and trying to stay ahead of energy transition policy and corporate conscience.
From an investment perspective, Shell’s move maximizes Nigeria’s maximum returns from deepwater prospects. Although the offshore environment is technically demanding, it offers vast production potential and less environmental risk than producing inshore. Furthermore, further investment in the industry aligns with more general national interests, including revenue capture, job creation, and further infrastructure.
Shell’s $510 million purchase of TotalEnergies’ interest in OML 118 is not a commercial deal but a Nigerian deepwater wager. While TotalEnergies doubles up on the gas and Shell doubles up on the offshore oil drama, Nigeria’s future is being crafted towards lower-risk, high-value production with long-term upside.
