TotalEnergies EP Nigeria has agreed to sell a 40% stake in two exploration licenses offshore Nigeria to Chevron Corp., marking the second major collaboration between the energy giants in six months as they seek to unlock hydrocarbon resources in frontier basins.

The French oil major signed a farmout agreement with Star Deep Water Petroleum Limited, a Chevron subsidiary, covering the PPL 2000 and PPL 2001 exploration licenses in the West Delta basin, according to a statement released Monday. The transaction is part of broader discussions between the two companies about global exploration opportunities.

Under the deal, TotalEnergies will retain operatorship and a 40 percent working interest in the blocks, while Chevron will hold 40 percent and South Atlantic Petroleum will maintain its 20 percent stake. The arrangement creates a balanced partnership between two of the world’s largest international oil companies in an area that has historically yielded significant discoveries.

The licenses span approximately 2,000 square kilometers in the prolific West Delta basin and were awarded to TotalEnergies and South Atlantic Petroleum following the 2024 exploration round organised by the Nigerian Upstream Petroleum Regulatory Commission. The regulator launched the licensing round as part of efforts to attract investment and boost production in Africa’s largest oil producer.

“After launching our joint venture in U.S. offshore exploration in June, we’re delighted to now expand our collaboration to Nigeria to unlock new resources in the West Delta basin,” said Nicola Mavilla, senior vice-president Exploration at TotalEnergies. “This new joint venture aims at derisking and developing new opportunities in Nigeria, in line with the objectives of the country.”

The transaction strengthens a growing strategic partnership between TotalEnergies and Chevron in offshore exploration. In June, TotalEnergies acquired a 25 percent working interest in a portfolio of exploration leases offshore United States comprising 40 Chevron-operated blocks. The rapid expansion of their collaboration to a second continent signals confidence in the partnership model and alignment on exploration strategy.

For Chevron, the Nigeria deal provides entry into acreage in a proven petroleum system where the company has limited exposure. The San Ramon, California-based producer has been seeking to expand its international exploration portfolio while maintaining capital discipline. Nigeria represents one of the few African countries where major international oil companies continue to pursue new opportunities despite security challenges and regulatory uncertainties that have prompted some competitors to divest.

TotalEnergies has maintained a significant presence in Nigeria for decades and operates multiple offshore production assets in the country. The company’s decision to retain operatorship while bringing in Chevron as an equal partner allows it to share exploration risk while leveraging its operational experience in Nigerian waters.

The West Delta basin has yielded numerous commercial discoveries over the past two decades, with water depths ranging from shallow to ultra-deep. The geology is considered prospective for both oil and gas accumulations, though exploration in the area requires substantial capital investment and advanced deepwater drilling capabilities.

South Atlantic Petroleum, the local partner in the consortium, will benefit from the technical expertise and financial resources that Chevron brings to the partnership. Nigerian regulations encourage partnerships between international oil companies and indigenous firms as part of local content development initiatives.

Completion of the farmout transaction remains subject to customary conditions, including regulatory approvals from Nigerian authorities. The Nigerian Upstream Petroleum Regulatory Commission typically reviews such transactions to ensure they align with national interests and local content requirements. The approval process can take several months.

The deal comes as international oil companies reassess their Africa strategies amid the global energy transition. While some producers have reduced their African footprints, TotalEnergies and Chevron appear committed to pursuing select opportunities where they see potential for competitive returns.

Financial terms of the transaction were not disclosed. Industry analysts said the deal likely includes both upfront consideration and future commitments for exploration drilling and seismic acquisition. (BUSINESS DAY)