In support of the federal government’s drive to reduce dependence on oil, Seplat Petroleum Development Company in a joint venture with the Nigerian National Petroleum Corporation (NNPC), is planning to raise $700 million for a gas development project.
The project, known as Assa North-Ohaji (ANOH) South, is one of the state corporation’s seven development projects aimed at boosting gas production and infrastructure in the West African nation.
The plant is scheduled to commence operations next year and will be built in Imo State. It will be operated by ANOH Gas Processing Company (owned by Seplat) and the Nigerian Gas Company (a unit of the NNPC).
To raising the capital, both companies will provide 60 percent of the funds as equity, while ANOH company will source the balance as debt. “Both parties already have each contributed $100 million in equity,” Seplat CEO, Austin Avuru said, adding that there will be another equity injection and at the back end of it will be debt.
Nigeria’s government has prioritised investments in gas infrastructure to improve supplies to power companies and diversify the economy away from oil, which currently accounts for the bulk of revenue.
According to the NNPC, Nigeria has around 202 trillion cubic feet (TCF) of proven gas reserves plus about 600 TCF unproven gas reserves. However, despite having the largest gas reserves in Africa, only about 25 percent are being produced or are under development.
Consequently, the government has actively engaged private oil companies in Nigeria to drive its objective of supplying gas to meet domestic needs and industrial processes.
In February, the state oil firm signed a Final Investment Decision (FID) with its Joint Venture (JV) partners – Shell Petroleum Development Company (SPDC), Total Exploration and Production Nigeria (TEPNG), and Nigeria Agip Oil Company (NAOC). The agreement was to develop the 4.3 trillion cubic feet (tcf) ANOH South fields.
Seplat became another partner in the development of the Assa North-Ohaji South fields after the company’s board approved the gas developmental project last month.
ANOH will target local customers, with the capacity to double production “depending on domestic demand and the availability of feeds including third-party gas,” Avuru added.
The plant, which will process wet gas from the unitized upstream fields, has an initial capacity of 300 million standard cubic feet per day, with accommodation for future expansion. It is scheduled to begin production by the last quarter of 2020 and the first supply is targeted in 2021.
The development is a major step by the state oil company to enable Nigeria to achieve sufficiency in domestic gas supply, unlock and harness the potential of this resource to increase industrial power supply, raise living standards and support economic growth and diversification.