*

TotalEnergies had hoped to divest the spill-prone onshore

oil

assets last year

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Deal between Chappal and Total had not closed after

multiple

deadline extensions

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Total was counting on cash from sale to help cut debt

By Isaac Anyaogu and America Hernandez

LAGOS/PARIS, Sept 23 - TotalEnergies' sale of

a minority stake in a Nigerian onshore oil producer has fallen

through, Nigerian regulators said on Tuesday, in a setback to

the French oil major's strategy to sell mature, polluting assets

and pay down debt.

Total agreed in July 2024 to sell its 10% stake in Shell

Petroleum Development Company of Nigeria Limited (SPDC) to

Mauritius-based Chappal Energies, one of a wave of divestments

by oil majors in recent years of onshore Nigerian oil assets.

However, regulatory approval for the sale granted last

October has been withdrawn because the two sides have not met

financial commitments required to complete the deal, according

to Eniola Akinkuoto, spokesperson for the Nigerian Upstream

Petroleum Regulatory Commission.

"The ministerial consent was accompanied by certain

financial obligations to the Nigerian people with strict

deadlines. However, both parties failed to meet their financial

commitments after repeated extensions, forcing the commission to

cancel the deal," Akinkuoto said on Tuesday.

Chappal Energies and TotalEnergies declined to comment.

One source familiar with the negotiations said Chappal

failed to raise the $860 million, and as a result Total did not

fulfil its requirement to pay regulatory fees and cover funds

for environmental rehabilitation and future liabilities.

The failed deal leaves Total saddled with its stake in a

business which has struggled with hundreds of oil spills as a

result of theft, sabotage and operational issues that led to

costly repairs and high-profile lawsuits.

In March, Shell sold its 30% stake in SPDC to a

consortium of five mostly local companies for up to $2.4

billion.

U.S. major Exxon Mobil ( XOM ), Italy's Eni and

Norway's Equinor ( EQNR ) have also sold Nigerian assets in

recent years to focus on newer, more profitable operations

elsewhere.

Chappal Energies, which specialises in producing oil and gas

from mature and distressed upstream assets in the Niger Delta,

last year successfully closed the purchase of Nigerian assets

from Equinor ( EQNR ) for $1.2 billion, with financial backing from

Mauritius Commercial Bank and commodities trader Trafigura.

Chappal has not disclosed its financial backers for the

proposed purchase from TotalEnergies.

Other SPDC shareholders include the Nigerian National

Petroleum Corporation (55%) and Eni (5%).

Total's unsuccessful exit is a setback to its goal to offload

more high cost, polluting assets and pay down some of its debt,

which leapt 89% to $25.9 billion in the year to July.

CEO Patrick Pouyanne told investors in July the Nigerian

sale was one of three deals that would bring in $3.5 billion

before year-end and lower the company's debt-to-equity ratio,

which hit 28% including leases and hybrid debt at mid-year.

The failed sale also leaves Total with interests in 15

licences in mostly oil-producing fields that netted the company

about 14,000 barrels of oil-equivalent per day in 2023, as well

as three licences in gas fields that account for 40% of its

Nigeria LNG gas supply.