Energy transition: Seplat to ramp up gas production to 850mmscf/day

As part of effort to boost the nations decade of gas agenda, Seplat Energies Plc,  Chief Operating Officer (COO), Mr. Samson Ezugworie, has said the company is set to increase its gas production capacity by an additional 390 million  standard cubic feet(390mm scf) by year end

Seplat Energy which is a leading Nigerian independent energy company listed on both the Nigerian Exchange and the London Stock Exchange is also driving the nation’s  energy transition with accessible, affordable and reliable energy that will drive social and economic prosperity for the nation

The COO disclosed this in an interview shortly after his participation in a panel session at the Africa Energy Forum with the theme: “The future of Energy Transformation in Africa: Clean Energy and Business Sustainability held on the sidelines of Oil Technology Conference (OTC) in Houston, Texas.

At the moment, he said the company is producing 460 million standard cubic feet (460mmscf) of gas per day  but would ramp up production to 850mmscf (850mmscf) per day by year end when  Assa North Ohaji South (ANOH) and Sapele gas plants come on stream.

He maintained that the entire 850 million scf of gas would be dedicated to the domestic  gas market to support the economic growth.

He explained that the injection of the 850 million scf of gas would go a long way in solving problems around gas-to-power because the gas produced from its Oben gas plant goes into the national grid, thereby boosting power generation capacity.

On gas pricing and debt, the Seplat boss said this has remained a major issue in the industry which has discouraged most International Oil Companies (IOCs) from investing in gas because the pricing needed to be gotten right while on the other hand, the piling debt for gas produced was a major disincentive, making it a less profitable business.

‘‘But for us at Seplat, what has played out for us is in the areas of strategy and foresight because we clearly know that even if you owe today, there is a chance that you will pay tomorrow because the issue about debt is clearing.

Now we are working ourselves into the interruptible gas supply and willing buyer willing seller contracts. In addition to that, what we are also doing is that we have a payment structure for those who are off taking our gas that ensures that going forward; we are not going to be having debts piling up. But then have a structured way of paying outstanding debts.

Though, it is a delicate balance but because this is something we have to do to contribute to the growth of the country. At the end of the day, you will see that the profit margin is not that significant,’’.

To lay credence to the claim of low margins, the COO disclosed that gas was 40 per cent of the company’s production at the end of 2023 and liquids 60 per cent. However, he said revenue from the 40 per cent gas production was 11 per cent at $123 million. ‘‘So, what does that tell you? The revenue margin is very little but not a waste.

We see that as a good vehicle that we also need to leverage on in running the oil business. Why is it so? If you want to run the oil business in a very responsible manner, then it has to go back to the Environment Social Governance (ESG) considerations.