Shell Nigeria Exploration and Production Company Ltd (SNEPCo) is set to deepen its hold on Nigeria’s offshore oil production following a landmark $510 million acquisition of TotalEnergies’ 12.5% non-operated stake in Oil Mining Lease (OML) 118.
The move, announced on May 29, 2025, by TotalEnergies, marks a significant reconfiguration of one of the country’s most critical deepwater oil blocs, centered around the Bonga field — Nigeria’s flagship offshore development.
Once regulatory approvals are secured, Shell’s ownership in the OML 118 Production Sharing Contract (PSC) will rise from 55% to 67.5%, further entrenching its control over the consortium, which includes Esso Exploration and Production Nigeria (20%) and Nigerian Agip Exploration (12.5%).
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OML 118 is located about 120 kilometers offshore of Nigeria’s Niger Delta. It contains the Bonga and Bonga North fields — assets of strategic importance not only to Shell but to Nigeria’s overall oil output and revenue profile.
Why This Matters for Shell and Nigeria
The acquisition underscores Shell’s deliberate pivot toward deepwater projects in Nigeria following its exit from onshore operations earlier this year. Shell had transferred its entire onshore business to Renaissance, a consortium of four local firms and one international energy group, citing operational difficulties such as vandalism, theft, and litigation in the onshore terrain.
By contrast, offshore fields like Bonga have remained relatively insulated from such disruptions and continue to be key contributors to Nigeria’s crude output. Shell’s increased stake in OML 118 positions it to drive future project developments, particularly Bonga North, which is expected to produce up to 110,000 barrels per day at peak, with the first oil anticipated by the end of the decade.
“Following our final investment decision on Bonga North last year, this acquisition brings another significant investment in Nigeria deepwater that contributes to sustained liquids production and growth in our Upstream portfolio,” said Shell’s Upstream President, Peter Costello.
Bonga North, a subsea tie-back to the existing Bonga Floating Production Storage and Offloading (FPSO) unit, is estimated to hold over 300 million barrels of recoverable oil equivalent — offering Shell a long-term production horizon and an opportunity to stabilize output from its Nigerian operations amid global upstream volatility.
What TotalEnergies Is Saying and Doing
The French major, meanwhile, says the sale is part of a strategic high-grading effort focused on low-cost, low-emission assets. TotalEnergies’ upstream chief, Nicolas Terraz, said the company is concentrating its investments on projects where it retains operational control and can align more closely with its decarbonization targets.
“In Nigeria, the company is focusing on its operated gas and offshore oil assets and is currently progressing the development of the Ubeta project, designed to sustain gas supply to Nigeria LNG,” Terraz stated.
The Ubeta gas field is a major upstream investment aimed at boosting supply to the Nigeria Liquefied Natural Gas (NLNG) facility in Bonny Island, where TotalEnergies is a significant shareholder. The company produced 209,000 barrels of oil equivalent per day in Nigeria in 2024, making the country one of its most vital contributors globally.
Impact on Nigeria’s Oil Sector
The deal comes at a time when Nigeria is under intense pressure to boost its crude production, which has remained well below OPEC quota levels due to theft, underinvestment, and project delays. With government revenue tightly linked to oil exports, increased foreign investment in stable deepwater projects is seen as a critical path to recovery.
Shell’s renewed commitment to Nigeria through this acquisition sends a strong signal to international markets that confidence in the country’s offshore sector remains robust — even as onshore operations continue to face regulatory and security challenges.
Furthermore, the transaction may also catalyze new fiscal discussions around Production Sharing Contracts. While Nigeria passed a landmark Petroleum Industry Act (PIA) in 2021 to overhaul outdated fiscal terms, legacy PSCs like OML 118 are still undergoing a gradual transition. Analysts say Shell’s deeper involvement in OML 118 may hasten the renegotiation of terms that could unlock more revenue for the Nigerian government.
There are also geopolitical implications. With Western energy majors pulling out of onshore operations and handing assets over to local firms, deepwater fields are fast becoming Nigeria’s new energy frontier — with Shell leading the way. This consolidation could either streamline decision-making or raise concerns about market concentration, depending on how the government responds.
Shell’s acquisition may also be seen as a vote of confidence in Nigeria’s offshore regulatory stability at a time when the country is struggling to attract broader foreign direct investment. Experts note that while deepwater operations are capital-intensive, they offer longer project life spans and fewer community-related disruptions.
However, some have cautioned that unless Nigeria addresses persistent challenges such as contract sanctity, regulatory clarity, and offshore licensing delays, deals like this may remain limited to a few legacy blocs rather than spurring a broader deepwater resurgence.