When Nigeria’s oil sector makes headlines, it’s often about the big international players—ExxonMobil, Shell, Chevron, TotalEnergies—moving assets around like chess pieces.
But every so often, a local titan steps into the spotlight, like we have seen in the past few days with Oriental Energy’s first indigenous owned FPSO and Emadeb Energy’s recent announcement of first oil from Ibom Field.
And whenever such events make news, the industry cannot afford but pays attention.
This time, it’s Mike Adenuga, the reclusive billionaire behind Conoil, who has stirred the waters.
Adenuga, known more for his telecom empire and quiet wealth than for public deals, has agreed to swap one of Conoil’s prized oil blocks with TotalEnergies—a transaction worth millions of dollars.
On the surface, it looks like just another asset shuffle. But scratch deeper, and it reveals the high-stakes balancing act of how indigenous operators are trying to hold their ground while oil majors are at the same time recalibrating portfolios.
Why would Adenuga trade away a block that took years to secure? What does TotalEnergies gain from the deal? And more importantly, what does this say about the future of these blocks?
The details of the swap agreement
The deal entails TotalEnergies acquiring Conoil’s 50% operating interest in block OPL 257 while the French company hands off its 40% participating interest in block OML 136, where the Nigerian company already has an operating interest of 60%.
This makes Conoil not just the 100% operator but also the sole risk-taker of OML 136—a gas‑rich acreage offshore western Nigeria.
The duo drilled an appraisal well in the field in 2010 which revealed several gas‑bearing reservoirs with the potential to produce up to 21 million standard cubic feet of gas daily.
On the other hand, TotalEnergies’ interest in OPL 257—an offshore acreage spanning about 370 sq km— will increase to 90% from 40%, however, with Conoil retaining the remaining 10%.
OPL 257 extends to PPL 261, where TotalEnergies (24%) and its joint venture partners discovered the Egina South field in 2005.
By next year, the French energy major says it will drill an appraisal well on the Egina South field, particularly on the OPL 257 side of it, as part of an effort to develop the Egina South extension as a tie-back to the Egina Main FPSO.
“This transaction, built on our longstanding partnership with Conoil, will enable TotalEnergies to proceed with the appraisal of the Egina South discovery, an attractive tie‑back opportunity for Egina FPSO,” said Mike Sangster, Senior VP Africa (Exploration & Production) at TotalEnergies.
The transaction does not in any way suggest that TotalEnergies is leaving Nigeria, but rather strengthening its deepwater dominance.
Consolidating OPL 257 shows that the company is only strategically doubling down on its investments in the country’s upstream oil sector.
Despite selling its remaining 12.5% participating interest in Shell-operating Bonga Field (OML 113) in September, the French company recently signalled interests in Nigeria’s forthcoming 2025 bid round scheduled for December 1.
Also, it plans to take an FID on its Ima gas project in 2026.
Both Ima and the currently ongoing Ubeta projects—will supply feed gas to NLNG Train 7 currently under construction at Bonny Island
Why the deal tilts against Conoil
Before the deal, Conoil held 50% in OPL 257. After the swap, Conoil’s stake drops to 10%, while TotalEnergies now controls 90%.
This means Conoil lost operational influence over a block that hosts part of the Egina South discovery, which is strategically located near the producing Egina FPSO.
OPL 257 is adjacent to an operational FPSO and has near-term upside by way of a tie-back.
Tie-backs are cost-efficient and can quickly generate revenue. Conoil forfeited its majority rights in the block just before this upside could be realised.
Conoil received 40% more control in OML 136, increasing to a total of 100%. But this block is less mature.
The gas-heavy block requires billions in investment for infrastructure like pipelines and LNG facilities, signalling Conoil’s potential future entry into the gas sector.
However, unlike OPL 257, the asset lacks immediate tie-back options to existing producing fields—making its development technically and financially demanding.
What this implies for Nigeria’s upstream future
The deal implies among other things that the development of TotalEnergies’ OPL 257 is on the horizon. Proximity to the producing Egina field means lower costs and faster commercialization compared to greenfield projects.
This represents significant untapped reserves that could boost Nigeria’s oil output, ultimately aligning with the government’s effort in this regard.
Despite a significant uptick in active oil rigs and commendable progress in the fight against theft, Nigeria’s oil output failed to meet OPEC’s quota of 1.5 million bpd (excluding condensates) for the third consecutive month in October.
Of course, the development could attract more Foreign Direct Investment (FDI), create jobs and generate government revenue.
What it really means
The swap deal between TotalEnergies and Conoil appears less about barrels of oil and more about strategic positioning and leverage. Despite speculation, the arrangement does not tilt in Conoil’s favour.
By surrendering a majority stake in the highly promising deepwater block OPL 257—with near-term development potential—Conoil has accepted a minority interest in OML 136, a block that demands far greater capital outlay and technical expertise to unlock.
In effect, Conoil, a smaller indigenous operator, now shoulders the burden of financing and developing a technically complex asset without the cushion of immediate cash flow.
This raises a critical question: if TotalEnergies eventually develops OPL 257 as part of the broader Egina South tie-back to the Egina main field, will Conoil’s 10% profit share be sufficient to fund its obligations in OML 136, where it stands as the sole risk taker?
The dilemma underscores a deeper challenge facing Nigeria’s indigenous oil companies—limited technical and financial capacity.
If this were not the case, why then are several local operators increasingly pooling resources or entering collaborations to bring their assets online?
