A total of $700 million is expected to be raised by the duo of Seplat Petroleum Development Company and the Nigerian National Petroleum Corporation (NNPC) for a gas project scheduled to commence production in 2020.
According to Bloomberg, the gas plant, Assa North-Ohaji South, is being constructed to reduce Nigeria’s reliance on oil.
ANOH Gas Processing Company, which is owned by Seplat Plc and the Nigerian Gas Company, a unit of NNPC, will develop, build and operate the plant in Imo State.
Nigeria is Africa’s biggest producer of crude oil, but the new project is one of seven to boost gas production and infrastructure development in the country.
“Seplat and Nigerian Gas will provide 60 percent of the funds as equity, while ANOH will source the balance as debt,” Bloomberg reports.
“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,” the respected journal quoted the CEO of Seplat, Mr Austin Avuru, as saying in an interview on Wednesday in Lagos.
According to him, the plant, which will process wet gas from the unitized upstream fields at OML 53 and OML 21, has an initial capacity of 300 million standard cubic feet per day. It’s scheduled to begin production by the last quarter of 2020 and the first supply is targeted in 2021.
Nigeria’s 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 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.
Lagos-based Seplat, meanwhile, 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. “If Niger Delta is stable, the rest is easy for us to handle.’’
The firm, which is listed on the London and Nigerian exchanges, will spend about 70 percent of its capital budget on drilling after a three-year lull, Avuru said. The rest will be for “facilities and gas development.”
Seplat is targeting output of 49,000 to 52,000 barrels of oil equivalent a day this year and “will probably start seeing a gradual increase in production’’ from next year on sustained expenditure and stability in the delta, he said.