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Why TOTAL’s Sale To Sinopec Is Surprising

There are five clear reasons why many were surprised by TOTAL’s announcement, on Monday November 18, 2012, that it sold its 20 percent stake in Nigeria’s Oil Mining Lease (OML) 138, to China Petrochemical Corp(Sinopec), as part of an asset-disposal programme.

  • How could the French major choose a $2.5Billion cheque over continued, profitable operation of a producing deepwater asset, gushing 140,000Barrels of Crude Oil a day, and primed to reach 180,000BOPD in a matter of months?
  • The OML 138 has considerable upside potential, at least at a first glance. To the east of Usan, the licence’s only producing field, is the undeveloped Ukot play, whose discovery well –Ukot-1-flowed at a rate of 13,900BOPD, on testing, in 1998. Usan’s appraisal had also led to the “discovery” of Usan West field which, with Ukot, is on standby, for near term development.

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