NNPC, Seplat woo investors for $700 million to develop gas project

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Nigerian National Petroleum Corporation (NNPC) and Seplat Petroleum Development Company Plc are shopping for $700 million (about N253 billion) to develop their joint venture gas project in Imo State, it was gathered at the weekend.

NNPC and Seplat had in August, last year, signed five agreements for the construction of the gas processing plant with an initial capacity of 300 million standard cubic feet per day of gas (mmscf/d). The agreements were meant to expedite the development of the project, which is expected to deliver about 3 billion standard cubic feet of gas per day in the future.

The project known as Assa North-Ohaji South (ANOH) gas development scheme, is one of the 7 Critical Gas Development Projects (7CGDP) identified to boost gas production and infrastructure development in the country.

A special purpose vehicle (SPV) known as ANOH Gas Processing Company (AGPC) is being promoted by the two firms to develop, build, operate and maintain the gas processing plant,

The Managing Director of Seplat, Austin Avuru, said Seplat and Nigerian Gas Company (NGC) will provide 60 per cent of the funds as equity, while ANOH will source the balance as debt.

“Both parties already have each contributed $100 million in equity. There will be another equity injection and at the back end of it will be debt,” Avuru said.

The plant, which will process wet gas from the unitised upstream fields at oil mining leases (OMLs) 53 and 21, has an initial capacity of 300 mmscf/d.

It’s scheduled to begin production by the last quarter of 2020 and the first supply is targeted in 2021, Avuru said.

Federal Government is encouraging investments in gas infrastructure to improve supplies to power companies and diversify the economy away from oil, which currently accounts for the bulk of its revenue.

ANOH will target local customers and has the capacity to double production “depending on domestic demand and the availability of feeds including third-party gas,” Avuru said.

Seplat will more than double capital spending to $200 million this year from 2018 as it seeks to take advantage of ‘relative stability’ in the Niger Delta region, he said, adding that if Niger Delta is stable, the rest is easy for us to handle.

Seplat, which is listed on the London and Nigerian Exchanges, will spend about 70 per cent of its capital budget on drilling after a three-year lull, Avuru said. The rest will be for “facilities and gas development,” he added.

Seplat is targeting output of 49,000 to 52,000 barrels of oil equivalent a day (boe/d) this year and will probably start seeing a gradual increase in production from next year on sustained expenditure and stability in the Niger Delta, he said.

He urged the AGPC to work hard and deliver the project on schedule, within budget, and to specification, stressing that it was designed as world-class gas processing plant with a capacity to deliver between 3.0 billion and 3.4 billion standard cubic feet of gas daily.

The Nigerian Gas Processing and Transportation Company (NGPTC) an arm of Nigerian Gas Company, signed the execution of Heads of Terms (HoT) on behalf of NNPC with Seplat and AGPC on December 19, 2017.

As a result of the HoT, the steering committee for the AGPC project, provided the leadership and broad guidance for the development and finalisation of the various commercial agreements required to underpin the project.

Avuru said the ANOH gas project is a landmark project, which captures the essence of the gas infrastructure development initiative of the Federal Government as encapsulated in the 7 Big Wins and 12 Business Focus Areas programmes.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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