TotalEnergies' Bonga Sale: A Strategic Pivot to High-Margin, Low-Emission Assets in West Africa

In a bold move reshaping West Africa's energy landscape, TotalEnergies has divested its 12.5% non-operated stake in Nigeria's Bonga oil field to Shell for $510 million, signaling a decisive shift toward high-margin, low-emission assets. This sale marks a strategic reallocation of capital to projects with clearer profit potential and environmental alignment, while underscoring opportunities for investors in gas-focused ventures like the Ubeta LNG project. Here's why this pivot could redefine African energy investing—and why now is the time to act.

The Strategic Rationale: Exit Low-ROI, Enter High-Growth Gas Plays

TotalEnergies' decision to exit Bonga—a mature asset averaging 11,000 boe/d in 2024—reflects its broader portfolio optimization strategy. The company is prioritizing assets with low technical costs, minimal emissions, and robust cash flows, such as the Ubeta gas condensate field in Nigeria's Rivers State. By divesting non-core stakes, TotalEnergies frees capital to invest in projects like Ubeta, which promises 300 million cubic feet of gas per day (MMcf/d) by 2027—directly fueling Nigeria LNG's (NLNG) expansion to 30 million metric tons per annum (Mtpa).

The Ubeta Play: A Goldmine in Gas

The $550 million Ubeta project, a joint venture with Nigeria's National Petroleum Corporation (NNPCL), exemplifies TotalEnergies' new focus. By leveraging existing infrastructure—such as the Obite treatment center and an 11-km pipeline—Ubeta achieves cost efficiencies while cutting emissions via a 5 MW solar plant and electrified drilling rigs. With over 90% of labor sourced locally, it also aligns with Nigeria's local content policies, creating jobs and economic traction.

Crucially, Ubeta's gas will feed NLNG's export capacity, which is critical as Nigeria aims to double LNG output by the late 2020s. For investors, this project represents a leveraged play on rising global LNG demand, with TotalEnergies' 15% stake in NLNG amplifying returns.

Regulatory Risks: Challenges, But Opportunities Ahead

Nigeria's oil sector remains hamstrung by theft, underinvestment, and OPEC quota compliance gaps—its output lags at 1.5 million b/d, below its 2.1 million b/d quota. However, President Tinubu's 2023 reforms offer hope. By streamlining contracts, boosting fiscal incentives for gas projects, and targeting $10 billion in deepwater gas investments, Nigeria aims to attract capital while addressing systemic bottlenecks.

TotalEnergies' $860 million sale of its SPDC stake to Chappal Energies in July 2024 further underscores its disciplined approach: shedding onshore liabilities while doubling down on offshore gas. This strategic rigor positions TotalEnergies to capitalize on Nigeria's 200+ trillion cubic feet of untapped gas reserves, a resource base rivaling Qatar's.

Implications for Nigeria's Energy Sector Growth

The Bonga-Ubeta pivot highlights two trajectories for Nigeria's energy future:
1. Gas-Led Growth: Projects like Ubeta and Shell's Bonga North (350 million barrels of reserves) will extend Nigeria's offshore production life, while NLNG's expansion cements its LNG export credentials.
2. Local Economic Lift: With TotalEnergies' 540 service stations and community investments, the company's gas focus could catalyze $2.5 billion in sector-wide investments under Tinubu's reforms, spurring jobs and infrastructure.

Meanwhile, Nigeria's Trans-Saharan Gas Pipeline and Nigeria-Morocco gas pipeline plans signal ambitions to become a regional energy hub—a vision TotalEnergies' gas plays directly support.

Investment Case: Why Act Now?

• Margin Expansion: Gas projects like Ubeta offer higher margins than oil, with NLNG's 30 Mtpa capacity unlocking premium LNG pricing.
• Policy Tailwinds: Tinubu's reforms are making Nigeria a more investor-friendly market, reducing risks for gas ventures.
• Global Demand: LNG demand is projected to grow 4% annually through 2030, driven by Asia and Europe's energy transition needs.

Conclusion: A Calculated Move, A Compelling Opportunity

TotalEnergies' Bonga sale isn't retreat—it's a strategic reallocation to high-potential gas assets that promise superior returns and sustainability. For investors, this pivot illuminates a path to capitalize on Nigeria's gas renaissance. With Ubeta's 2027 production start and NLNG's capacity expansion, the window to secure positions in this game-changing sector is narrowing. Act now to secure exposure to West Africa's next energy boom.

The time to invest in Nigeria's gas future is now.