French oil company Total SA announced on Monday it had signed a 20 percent divesture of its stake in the OML 138 offshore oil block near Nigeria for $2.5 billion in cash, to the largest Asian oil refiner Sinopec Corp., in line with plans to raise funds for primary energy projects.
Located about 100 kilometers from Nigeria’s southeastern coast, the oil block houses Total’s Usan production site which has a 180,000 barrels per day production capacity and a storage capacity of 2 million barrels.
In September, Total CEO, Christophe de Margerie, said the company plans to better manage its core businesses by shedding off about $15 billion to $20 billion worth of its of assets from 2012 to 2014, to raise funds for oil and gas projects with most of the divestiture coming from the exploration and production division.
“The transaction is aligned with Total’s active portfolio management. Usan accounts for less than 10% of the Group’s equity production in Nigeria. This sale of an asset operated from a minority position will allow us to focus our resources on the material growth opportunities in Total’s portfolio” Yves-Louis Darricarrère, President Upstream at Total, said in a statement.
Total has said the divesture agreement with Sinopec is subject to approval by Nigerian authorities.
The acquisition move by the Chinese state-run corporation is coming on the heels of its depleting crude oil reserves which fell from 3.3 billion barrels in 2007 to 2.8 billion barrels at the end of last year, enough for nine years of production at 2011 levels.
In 2009, it acquired Addax Petroleum Corp., adding reserves in Nigeria, Cameroon and Gabon.
According to an official statement by Total, state-run Nigerian National Petroleum Corp. is the concession holder on the OML 138 field. Other partners include Chevron Corp, Esso E&P Nigeria Ltd. and Nexen Petroleum Nigeria Ltd. Nigeria’s state-run firm also would have final say on the sale.