Shell to buy TotalEnergies’ Bonga stake for $510m, boosting Nigeria deep-water presence

Why Is Shell Buying a Larger Stake in the Bonga Field?

Shell plc is deepening its footprint in Nigeria’s offshore energy sector with a strategic acquisition aimed at strengthening its upstream portfolio. On May 28, 2025, Shell Nigeria Exploration and Production Company (SNEPCo), a wholly owned subsidiary of Shell plc, signed a definitive agreement with TotalEnergies EP Nigeria Limited to acquire its entire 12.5% non-operated stake in the Oil Mining Lease 118 Production Sharing Contract (OML 118 PSC), which includes the prolific Bonga oil field. The transaction, valued at $510 million, will increase Shell’s interest in the block from 55% to 67.5%.

This acquisition marks Shell’s second major investment announcement in Nigeria’s offshore sector in less than six months, following its final investment decision in December 2024 to proceed with the Bonga North development. Together, these moves reflect Shell’s bullish stance on deep-water oil even as it gradually retreats from legacy onshore operations in Nigeria.

The OML 118 block is among the country’s most technically advanced offshore developments, with its Bonga FPSO acting as a regional hub. Production from Bonga started in 2005, and the field reached its one-billion-barrel milestone in 2023. With this latest stake increase, Shell is reaffirming its control over one of Nigeria’s most critical energy assets.

Why Did TotalEnergies Exit Its Stake in OML 118?

TotalEnergies’ sale of its 12.5% non-operated interest in OML 118 aligns with its ongoing portfolio optimization strategy. Nicolas Terraz, President of Exploration & Production at TotalEnergies, said the company is “high-grading its upstream portfolio” by prioritizing low-cost, low-emission assets with stronger cash returns. The French energy major is now redirecting capital toward gas-focused and operator-controlled projects, notably the development of the Ubeta gas field that will support Nigeria LNG‘s feedstock requirements.

The Bonga stake contributed around 11,000 barrels of oil equivalent per day to TotalEnergies’ 2024 output. However, it lacked operational control, which made the asset less strategic compared to projects where the company is the lead operator. As global oil majors adapt their portfolios to reflect energy transition goals and capital discipline, shedding non-core assets like Bonga has become a common theme.

Analysts see the move as consistent with TotalEnergies’ broader shift toward integrated gas and renewables, though it remains committed to Nigeria’s energy landscape through other ventures such as the NLNG and the Egina deep-water project.

What Is the Significance of the Bonga Field in Nigeria’s Energy Strategy?

Located 120 km offshore in water depths exceeding 1,000 meters, the Bonga field was the first deep-water oil field in Nigeria and has served as a blueprint for subsequent offshore developments. Operated by SNEPCo, it was developed under the OML 118 PSC in partnership with Esso Exploration and Production Nigeria Ltd. (20%), Nigerian Agip Exploration Ltd. (12.5%), and previously, TotalEnergies EP Nigeria Ltd. (12.5%).

Bonga has a production capacity of 225,000 barrels per day and plays a crucial role in Nigeria’s contribution to OPEC crude output. As of 2025, the field remains a key source of stable offshore production, particularly as the country grapples with onshore security issues and pipeline sabotage.

SNEPCo’s control of the FPSO and field infrastructure allows it to drive efficiency gains, pursue production optimization, and expand nearby resources. The upcoming Bonga North development, announced in December 2024, will be a subsea tie-back to the existing FPSO, leveraging shared infrastructure to reduce cost per barrel.

How Will Shell Benefit from a 67.5% Stake?

From Shell’s perspective, raising its equity stake in OML 118 to 67.5% deepens its control and economic exposure to one of the most technically resilient and high-performing assets in West Africa. Shell President for Upstream, Peter Costello, noted the transaction supports the company’s efforts to grow upstream liquids output and maintain global production at 1.4 million barrels per day through 2030.

The Bonga North project, which carries an estimated 300 million barrels of recoverable resources, is expected to deliver 110,000 barrels per day at peak. Shell anticipates first oil by 2029 or 2030, reinforcing its forecasted 1% annual growth in upstream and integrated gas production.

This transaction also reflects a broader pattern in Shell’s capital allocation strategy. While divesting onshore and mature oil assets globally, the company is selectively reinvesting in deep-water and gas projects with high margins, stable fiscal regimes, and low carbon intensity per barrel.

Institutional and Market Reaction: What Does Sentiment Suggest?

Initial sentiment from institutional investors has been cautiously positive. Analysts noted that the $510 million acquisition price reflects a fair valuation given the asset’s existing production profile and expansion potential via Bonga North. The deal could be earnings-accretive once production volumes ramp up, particularly if Brent prices stay above $80 per barrel.

Trading activity around Shell stock post-announcement showed a slight uptick in volumes, with oil-weighted portfolios and energy-focused ETFs recording minor rebalancing in favor of Shell plc. Meanwhile, TotalEnergies has been seen rotating capital into projects aligned with its low-carbon strategy, prompting a neutral-to-positive sentiment from long-term investors focused on ESG compliance and breakeven thresholds.

From a sovereign perspective, Nigerian officials have not yet issued public statements regarding the transaction, but industry observers view the deal as a reaffirmation of confidence in Nigeria’s deep-water regime under the post-PIA fiscal structure.

What Does This Mean for Nigeria’s Deep-Water Outlook?

Nigeria has been under pressure to stabilize its oil production and meet its OPEC quota targets, often missing them due to underinvestment, security issues, and aging infrastructure. Deep-water projects such as Bonga, Egina, and Akpo have offered a buffer against onshore volatility.

Shell’s expanded investment could catalyze new capital flows into Nigeria’s offshore segment. The tie-back design of Bonga North minimizes greenfield costs and maximizes returns, making it an attractive template for future deep-water expansions.

The Petroleum Industry Act (PIA), which came into effect in 2021, was designed to make Nigeria more competitive globally for upstream investment. With Shell doubling down on Bonga, the move could encourage other IOCs to reconsider their Nigerian portfolios or expedite stalled development plans.

Could This Trigger More M&A or Portfolio Adjustments?

There is growing expectation among analysts that Shell’s consolidation move could lead to further asset reshuffling in the West African offshore market. Similar deep-water asset sales have occurred recently across Angola and Ghana, where oil majors are trimming non-operated holdings while doubling down on operatorship and scale.

Additionally, SNEPCo’s enhanced control over Bonga could improve negotiating leverage with local suppliers, enhance fiscal efficiency through scale, and accelerate timelines for Bonga North and any future adjacent discoveries.

For TotalEnergies, the transaction gives it flexibility to pursue LNG expansion and upstream gas growth, both domestically and internationally. The company’s LNG footprint across Nigeria, Mozambique, and the Middle East has grown into a core pillar of its decarbonization pathway and earnings profile.

What’s the Timeline for Deal Completion?

Shell and TotalEnergies expect the transaction to close by year-end 2025, pending regulatory approvals and partner consents. Once finalized, Shell will begin 2026 with a fortified position in Nigeria’s upstream sector, both in terms of production share and strategic influence.

Future updates may include new capital expenditure guidance for Bonga North, potential reserve upgrades, and field optimization strategies aimed at lowering per-barrel costs amid increasing ESG scrutiny.

Sentiment Summary and Investor Watchpoints

Shell plc (LSE: SHEL): Moderate buy-side flow observed post-announcement; analysts broadly supportive given the asset quality and tie-back economics. The acquisition supports Shell’s capex discipline, dividend cover, and upstream production guidance. Buy-rated by several institutions, contingent on Bonga North execution.

TotalEnergies SE (EPA: TTE): No major change in institutional sentiment. The deal is seen as capital-positive, supporting LNG-centric reallocation. Analysts see upside in Nigerian gas strategy and ESG-aligned divestment rationale.

Shell’s $510M Bonga Expansion Marks More Than Just an Asset Play

Shell’s $510 million stake increase in the Bonga field is more than a tactical equity adjustment—it’s a strategic reaffirmation of deep-water Africa’s relevance in the global energy mix. As the company recalibrates its upstream priorities to favor high-margin, low-carbon-intensity assets, Bonga emerges as a symbol of operational scale, fiscal alignment, and geopolitical staying power. For Nigeria, the transaction is not just a capital injection but a durable vote of confidence in its ability to sustain long-term offshore investment, even as global energy firms navigate the twin currents of decarbonization and portfolio consolidation.