Nigeria signs deepwater oil contract with TotalEnergies as oil rises on weaker dollar and Russian supply disruptions

Nigeria has signed a production-sharing contract (PSC) with TotalEnergies and local firm South Atlantic Petroleum for two offshore blocks, in a step to boost exploration and attract investment under its new oil framework just as oil prices rose more than 1% on Monday on concerns that intensifying airstrikes in Russia and Ukraine could lead to supply disruptions, while a weaker dollar lent additional support to benchmarks. Brent crude futures were up 70 cents, or 1%, at $68.18 a barrel. U.S. West Texas Intermediate crude futures rose by 76 cents, or 1.2%, to $64.77. Trading is expected to be muted because of a U.S. public holiday. Ukrainian President Volodymyr Zelenskiy on Sunday vowed to retaliate against Russian drone strikes on power facilities in his country’s north and south, and ordered more strikes deep inside Russia.
Nigeria, Africa’s largest oil producer, is seeking to revitalize its upstream sector amid global energy transition pressures and declining investment in fossil fuels. The deal covers petroleum prospecting licences 2000 and 2001, awarded during the 2024 licensing round, and spans about 2,000 square km (772 square miles) in the Niger Delta Basin. TotalEnergies holds an 80% contractor interest, while Sapetro holds 20%, the upstream oil regulator said on Monday. “This PSC signals the start of a committed work programme that will help us unlock the untapped geological potential of our deepwater, expand our reserves, boost production, and strengthen Nigeria’s energy security,” said Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission. The contract includes provisions for signature and production bonuses, minimum work guarantees, profit-sharing, and compliance with host community development obligations. It also outlines environmental safeguards, including decommissioning and remediation funds. Meanwhile Three and a half years into the war, both Russia and Ukraine have intensified airstrikes in recent weeks, even as efforts are underway to resolve the crisis.
Markets remain concerned about Russian oil flows, with weekly shipments from its ports dropping to a four-week low of 2.72 million barrels per day (bpd), according to tanker tracker data cited by ANZ analysts. Elsewhere, the U.S. labour market report this week will give a read on the economy’s health and test investor confidence that interest rate cuts are coming soon, a view that has strengthened appetite for riskier assets such as commodities. Ahead of the data, the dollar was close to a five-week low on Monday, making oil less expensive for buyers using other currencies. Investors were also focused on Beijing, where Chinese President Xi Jinping, Russian counterpart Vladimir Putin and Indian Prime Minister Narendra Modi are attending a regional summit. China’s manufacturing activity expanded at the quickest pace in August in five months, a private-sector survey showed on Monday. That helped lend support to oil and copper prices, SEB commodities analyst Bjarne Schieldrop said in a note to clients on Monday. Also on the radar was an OPEC+ meeting on September 7. “The next key fundamental question is whether OPEC+ oil producers will continue to raise the group’s output targets beyond September, with a decision due within days,” analyst Tim Evans said in the newsletter Evans on Energy.
Coming out of the summer season, oil inventories should rise in the last quarter of 2025 and the first quarter of 2026, HSBC analysts said in a note, with a surplus of 1.6 million barrels per day in the fourth quarter. Higher OPEC+ supply and rising stockpiles could keep pressure on oil prices after both Brent and WTI registered their first monthly declines in four months in August, losing 6% or more. “Oil practitioners will continue to curb their enthusiasm,” PVM analyst John Evans said in a note, citing the increased OPEC+ supply.