French oil giant Total SA (TOT: Quote,TTFNF.PK,TTA.L) agreed Monday to sell its 20 percent stake in a large Nigerian oil block to China's state-owned Sinopec.
The Chinese will pay $2.5 billion for the the OML 138 block that contains the Usan field which started production in February 2012.
"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," said Yves-Louis Darricarrère, President Upstream at Total.
China's state-owned oil companies are scouting for new oil and gas assets amid rising demand from the world's second-largest economy. Beijing-based Sinopec is the largest producer and supplier of oil products in Asia.
Sinopec agreed to buy drilling properties in Ohio and elsewhere for about $2.2 billion from Devon Energy Corp. (DVN) in early January, and also agreed to buy a 49 percent stake in U.K. North Sea oil and gas assets in July from Talisman Energy Inc. (TLM) for $1.5 billion.
The deal is part of Total's plans announced in late September to divest assets worth about $15 billion to $20 billion by 2015. However, the deal is subject to approval by the Nigerian authorities.
Total's wholly owned subsidiary Total E&P Nigeria Ltd. operated OML 138 with a 20 percent interest, while Nigerian National Petroleum Corp. is the concession holder. Total's partners were Chevron Corp. (CVX: Quote) (30 percent), Exxon Mobil Corp. (XOM: Quote) (30 percent) and Canadian energy company Nexen, Inc. (NXY: Quote,NXY.TO: Quote) (20 percent).
Nigeria is the largest oil producer in Africa. According to the International Monetary Fund, the Nigerian economy is heavily dependent on the oil sector, which accounts for over 95 percent of export earnings and about 40 percent of government revenues.
In 2012, Total is celebrating fifty years of its presence in Nigeria, with the groups production in Nigeria being 287,000 barrels of oil equivalent per day in 2011.
In Monday's regular trading session, TOT is currently trading at $48.39, up $0.96 or 2.02% on a volume of 0.55 million shares, and SNP is trading at $103.51, up $1.48 or 1.45% on a volume of 21,095 shares.
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by RTT Staff Writer
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