Shell and NAE Acquire 12.5% Stake in OML 118 from TotalEnergies as NUPRC Approves Deal

The Nigerian oil and gas industry witnessed a significant transaction on September 26, 2025, as the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) officially approved the transfer of a 12.5 percent stake in Oil Mining Lease (OML) 118 from TotalEnergies Exploration and Production Nigeria Limited to Shell Nigeria Exploration and Production Company (SNEPCo) and Nigerian Agip Exploration (NAE).

The approval marks yet another milestone in the restructuring of Nigeria’s upstream oil and gas assets, aligning with the government’s ongoing push for efficiency, accountability, and a stronger transition toward a gas-driven energy economy.

The Transaction

TotalEnergies, one of the largest international oil companies operating in Nigeria, divested its 12.5 percent equity in OML 118. The stake is now split between SNEPCo and NAE, two existing partners in the deepwater asset.

The NUPRC emphasized that the acquisition was approved only after both companies demonstrated their technical expertise, financial capacity, and managerial readiness to assume greater operational responsibilities in the highly valuable oil block.

Key Conditions for Approval

The regulator outlined several key conditions that must accompany the transfer:

Demonstrated Capacity

Both Shell and Agip were required to prove their ability to manage large-scale deepwater operations. According to NUPRC, both companies satisfied the conditions, underscoring their long-standing presence in Nigeria’s upstream sector.

Assumption of Liabilities

The transaction means that all decommissioning and abandonment responsibilities previously carried by TotalEnergies will now be assumed by Shell and NAE. Beyond that, the companies must also take over host community obligations, which fall under the Federal Government’s oil and gas framework. These commitments are vital, as they ensure that local communities benefit from resource development while safeguarding long-term environmental responsibilities.

Ministerial Consent and Regulatory Fees

Though approved by NUPRC, the deal remains subject to ministerial consent in line with the Petroleum Industry Act (PIA) 2021. Specifically, sections 95(1), (2), (7), (11), and (12) of the PIA require ministerial approval before a final transfer of ownership is completed.

As part of the regulatory process, Shell and NAE must also pay a combined premium and consent fee of seven percent of the total transaction value. With the divestment valued at $510 million, this translates to hundreds of millions in statutory payments—five percent from Shell and two percent from NAE.

Written Undertakings

Finally, both acquiring companies are mandated to submit written undertakings to NUPRC. These documents confirm that the firms accept all responsibilities tied to the acquired stake, ensuring clarity on issues of accountability, liabilities, and compliance.

Strategic Context

The OML 118 stake transfer does not stand alone but fits into a broader wave of restructuring in Nigeria’s oil and gas industry.

Earlier in September, the Nigerian National Petroleum Company Limited (NNPCL), together with TotalEnergies and South Atlantic Petroleum (SAPETRO), signed a new Production Sharing Contract (PSC) covering deepwater Petroleum Prospecting Licences (PPLs) 2000 and 2001. That agreement, also supervised by NUPRC, highlighted the regulator’s effort to provide clarity and stability in Nigeria’s deepwater operations, often considered among the most technically demanding and capital-intensive in the world.

Gbenga Komolafe, Chief Executive of NUPRC, has consistently emphasized that Nigeria’s new contracts will prioritize favorable terms for natural gas projects. This reflects the government’s drive to pivot the economy toward gas, positioning it as the country’s transition fuel in line with global energy trends.

Implications of the Deal

For Shell and Agip

The acquisition gives Shell and Agip deeper control in OML 118, expanding their responsibilities while also increasing their share of revenue from production. It also exposes them to higher operational and financial risks, given the heavy capital requirements and environmental obligations associated with deepwater operations.

For Shell, which has faced challenges with divestments in onshore and shallow water assets, the OML 118 stake strengthens its foothold in Nigeria’s deepwater space—an area seen as more stable and profitable. For NAE, the deal further consolidates its presence in the country’s offshore oil sector.

For TotalEnergies

The French energy giant’s divestment represents a strategic recalibration of its Nigerian portfolio. By exiting its position in OML 118, TotalEnergies appears focused on streamlining operations and possibly redirecting resources into assets or projects that better align with its global energy transition goals.

For Nigeria’s Oil and Gas Sector

On a broader scale, the transaction highlights the increasing consolidation in Nigeria’s upstream industry. It signals that existing players with technical and financial muscle are deepening their stakes, while others divest to rebalance portfolios.

The regulator’s insistence on strict adherence to liabilities and host community development agreements also reinforces Nigeria’s commitment to sustainable resource management. Importantly, the deal demonstrates that the Petroleum Industry Act of 2021 is actively shaping investment decisions and providing a clearer legal framework for asset transfers.

Looking Ahead

As Nigeria continues to implement reforms under the PIA, deals like the OML 118 divestment underscore the evolving dynamics of the oil and gas sector. On one hand, they provide opportunities for committed investors to expand their footprint; on the other, they highlight the government’s growing insistence on accountability, host community development, and sustainable operations.

For Shell and Agip, the challenge will be managing the enlarged responsibilities while ensuring continued profitability in a volatile global oil market. For Nigeria, the key test remains balancing the attraction of foreign investment with the need for energy transition and greater local participation in the sector.

Conclusion

The approval of Shell and NAE’s acquisition of TotalEnergies’ 12.5 percent stake in OML 118 is more than a routine transaction—it is a reflection of Nigeria’s new upstream order. With tighter regulations, a stronger emphasis on host communities, and a clear pivot toward gas as the fuel of the future, the country’s oil and gas sector is in a period of transformation.

As stakeholders await the final ministerial consent, one thing is clear: the landscape of Nigeria’s deepwater assets is changing, and companies that can demonstrate resilience, technical expertise, and commitment to sustainable practices will remain at the forefront of the industry.