Norway’s Equinor May Sell 20.2% Stake in Agbami Field To Little-known Chappal Energy

Norway’s Equinor ASA, has chosen a little-known company, Chappal Energy, as the preferred buyer of its stake in one of Nigeria’s largest deep-water oil fields, Agbami, according to people familiar with the matter.

The energy giant is trying to sell its 20.2 per cent interest in the Agbami field – joining other international producers such as Shell Plc, Exxon Mobil Corporation and Eni SpA in looking to offload assets in Africa’s biggest crude producer, Bloomberg reported on Monday.

In January, Equinor launched the sale of its stake in an offshore Nigerian oilfield, joining a retreat by Western energy firms from the West African country as they focus on newer and more profitable operations, three industry sources said at the time.

The company then hired investment bank, Standard Chartered, to run the sale process, which could raise up to $1 billion.

Equinor was entitled to net production of around 25,000 barrels per day of oil equivalent (boed) through its stake in the Agbami field, which is operated by Chevron, according to its website at the time.

Nigeria’s offshore oil and gas operations remain lucrative due to their larger scale, better security and attractive financial terms offered by the government.

The Norwegian company, which has been present in Nigeria since 1992, also holds a 53.85 per cent stake in exploration licence OML 129, according to its website.

Equinor’s profit soared to a new record last year, driven by European gas prices hitting all-time highs in the wake of Russia’s invasion of Ukraine last February.

Operations outside Norway account for around a third of the company’s total oil and gas production.

However, Bloomberg said Monday that Chappal Energies Mauritius Limited has now emerged as the favoured buyer of Equinor’s interest in the asset, which is operated by Chevron Corporation and produces about 100,000 barrels of oil a day, the people said.

Five companies including Prime Oil & Gas Cooperatief UA, which already has a 12.5 per cent share in the Agbami field, submitted binding bids, according to the sources.

Prime O&G is a joint venture between Vancouver-registered Africa Oil Corporation and Brazil’s Grupo BTG Pactual.

Agbami has accounted for about 7 per cent of Nigeria’s oil output this year and only the Shell-operated Bonga field currently produces more oil in the country.

A sales agreement hasn’t yet been signed and Chappal Energies still needs to raise the funds to finance the deal, according to the people, who didn’t say what purchase price has been negotiated. Spokespeople for Equinor, Chappal Energies and Prime O&G declined to comment.

Chappal Energies was founded in May 2022, according to Mauritian corporate records. Bill Higgs, the British former chief executive of Kurdistan-focused Genel Energy Plc, and Hezekiah Oyinlola, a Nigerian who spent three decades working for the world’s biggest oil services provider, SLB, joined the company’s board in February. Oyinlola is also chairman of Lagos-based bank Guaranty Trust Holding Co.

Chappal Energies’ Managing Director, Ufoma Immanuel, previously held the same position at a Lagos-based company named Chappal Petroleum Development Ltd., which was created in 2020 and chaired by the founding chief executive officer of Seplat Energy Plc, Austin Avuru.

Chappal Petroleum unsuccessfully bid for Nigerian shallow-water oil blocks that Exxon agreed to sell to Seplat in February 2022, Bloomberg said.

Avuru, who is not on the board of Chappal Energies, and Immanuel didn’t respond to questions about the relationship between the two firms.

While Equinor is seeking to exit its sole Nigerian asset after more than three decades in the country, the other oil majors are limiting their divestments to onshore and shallow water assets in order to concentrate on deep-water projects.

Equinor is also exploring the sale of its operations in Azerbaijan, including a stake in the country’s largest oil project, according to people with knowledge of the matter.

Agbami is located 110 kilometres off the Nigerian coast in water depths of 1,500 metres. It had been developed using subsea wells and is the world’s largest floating production, storage and offloading (FPSO) vessel.

The FPSO can store up to 2.2 million barrels of oil and will be on location for more than 20 years. Equinor also operates two exploration licences—OMLs 128 and 129—with a 53.85 per cent share in both. Six wells have been drilled in both, with two discoveries made.

On its website, Equinor says it has paid over US$ 3 billion in taxes to the Federal Government of Nigeria, which it said ultimately also creates value for society.

Emmanuel Addeh in Abuja

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