Total Group is seeking to sell its 12.5 per cent stake in a major deepwater oilfield off the coast of Nigeria, industry and banking sources said, in an effort to adjust the energy company’s Africa portfolio amid a broad expansion.
The stake in Oil Mining Lease 118, which is located some 120 kilometres (75 miles) off the Niger Delta, is valued at up to $750m, according to two of the sources.
An investment bank, Rothschild, is running the sale process for Total, according to the sources.
OML 118 is operated by Royal Dutch Shell, which holds a 55 per cent interest. Exxon Mobil holds a 20 per cent stake in the block, while Italy’s Eni and Total each hold 12.5 per cent.
Reuters quoted the sources as saying that sale process was part of Total’s plan to sell $5bn of assets around the world by 2020.
The block includes the Bonga field, Nigeria’s first deepwater project which started in 2005 and produced around 225,000 barrels of oil and 150 million standard cubic feet of gas per day at its peak.
Output from the block is planned to grow sharply with the $10bn development of the Bonga Southwest field which is expected to produce up to 200,000 barrels per day, roughly 10 per cent of Nigeria’s current oil production.
Nigeria’s vast oil resources have attracted foreign oil companies for decades but changes to the country’s oil revenue laws as well as an unexpected tax levy over the past year could make investments in offshore projects less attractive.
Shell and its partners were expected to make an investment decision on Bonga Southwest last year but uncertainty over its fiscal terms with the Nigerian government have delayed the process.
Shell in February launched a tender for bids for a 225,000 bpd floating production, storage and offloading vessel for the new development phase. It has since pushed back the schedule for the bids.
The sale comes as Total prepares to expand its operations in Africa after agreeing earlier this year to buy Anadarko’s Africa portfolio for $8.8bn as part of its acquisition by US rival Occidental Corporation.
Total in January started production from the Egina oilfield off Nigeria’s coast, which is expected to plateau at 200,000 bpd of oil.