Shell and Agip Acquire TotalEnergies’ Stake in OML 118

Shell Nigeria Exploration & Production Company (SNEPco) and Nigerian Agip Exploration (NAE) have finalized the acquisition of the 12.5 percent stake previously owned by TotalEnergies in Oil Mining Lease (OML) 118, a deepwater block that hosts the prolific Bonga oil field. The transaction, valued at $510 million, strengthens the strategic position of both Shell and Agip in Nigeria’s offshore oil industry, while also reflecting the changing landscape of international oil company participation in the country.

According to details of the deal, Shell secured 10 percent of the divested interest for $408 million, while Agip purchased the remaining 2.5 percent for $102 million. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) granted approval for the transaction in line with Section 95 of the Petroleum Industry Act (PIA) 2021, after a thorough due diligence process that confirmed the technical and financial capacities of both assignees.

With this development, Shell and Agip will take over all obligations associated with the interest, including decommissioning, abandonment, and host community liabilities. They are also required to fulfill financial commitments such as premiums and processing fees, structured at 5 percent and 2 percent respectively on the value of the transaction, in line with the provisions of the PIA. Final ministerial consent is expected to conclude the deal and give the parties full rights over the acquired stake.

The acquisition marks a new phase in the ownership structure of OML 118. TotalEnergies, which has steadily reduced its stakes in some Nigerian upstream assets, remains active in deepwater and gas developments but has divested certain holdings as part of a global portfolio adjustment strategy. For Shell and Agip, the acquisition not only increases their equity participation but also consolidates their operational presence in one of Nigeria’s most valuable offshore assets.

Industry experts have noted that the deal is significant for Nigeria’s oil and gas sector at a time when the government is making concerted efforts to attract investment into upstream activities. The Bonga field, which lies 120 kilometers off the coast in water depths of over 1,000 meters, is regarded as a pioneering project in Nigeria’s deepwater exploration. Since its first oil in 2005, the asset has remained a cornerstone of Nigeria’s offshore production, with capacity to contribute substantially to national output.

The strengthened positions of Shell and Agip could also spur new discussions around the expansion of deepwater projects associated with the Bonga asset. Stakeholders expect that higher equity stakes could incentivize further exploration, production optimization, and even the advancement of related satellite projects that could boost Nigeria’s production profile.

For the Nigerian government, the transaction underscores the relevance of the Petroleum Industry Act as a framework that encourages transparent divestment processes and guarantees continuity in operations. The NUPRC emphasized that the approval process involved rigorous due diligence, ensuring that only technically competent and financially sound operators assumed control of the divested interests. This is seen as critical to avoiding disruptions in production and safeguarding the country’s revenue base.

Market watchers also highlight the importance of the obligations transferred to the new assignees, particularly regarding host community development. Under the PIA, oil companies are mandated to set aside specific contributions for the benefit of local communities. By inheriting these responsibilities, Shell and Agip are expected to deepen engagement with host communities in the Niger Delta, promoting stability and cooperation in the region.

In addition, the acquisition reinforces Shell’s role as a leading player in Nigeria’s offshore oil production. By increasing its stake in OML 118, Shell strengthens its influence over the asset’s operations and can leverage economies of scale in managing production activities. Agip’s additional participation further diversifies the shareholder base and consolidates its investment in Nigeria’s upstream sector, signaling its long-term commitment to the country’s energy landscape.

Observers also argue that this transaction could provide momentum for broader reforms and investment in Nigeria’s oil industry. With regulatory certainty provided by the PIA, divestment deals are expected to be handled more efficiently, thereby attracting new capital inflows. The government hopes that such transactions will support its broader objectives of boosting oil output, shoring up foreign exchange reserves, and strengthening economic stability.

Looking ahead, industry analysts suggest that ministerial consent, which remains the final hurdle, will be crucial in sealing the deal. Once approved, Shell and Agip will not only expand their ownership stakes but also take on greater responsibility for ensuring production growth, environmental sustainability, and host community development.

The acquisition is therefore more than just a financial transaction; it represents a broader shift in Nigeria’s upstream dynamics. While some international oil companies divest certain interests, others consolidate their stakes, ensuring that offshore production remains a critical part of Nigeria’s energy mix. For Nigeria, this trend offers both opportunities and challenges—opportunities in terms of new investments and production optimization, and challenges in balancing the expectations of host communities and ensuring environmental compliance.

As Nigeria seeks to boost its oil production to meet OPEC quotas and enhance revenue generation, the OML 118 acquisition could play a pivotal role. With Shell and Agip at the helm, the asset is expected to remain a cornerstone of deepwater production, supporting Nigeria’s energy ambitions and reinforcing its position as a leading oil producer in Africa.