Seplat CEO Says Delayed PIB Passage Danger To Gas-To-Power Drive

Seplat Petroleum Development Company Plc, a leading indigenous energy company, has listed the delay in the passage of the Petroleum Industry Bill (PIB), amongst others as challenges bedevilling the gas-to-power drive in Nigeria.

The PIB which has been with the federal lawmakers for over a decade is currently under scrutiny again at the National Assembly with a promise that it will be passed by June. The absence of regulation for the industry on which the nation’s economy runs is hindering the growth of the sector and responsible for the exit of International Oil Companies (IoCs) from Nigeria.

Roger Brown, Chief Executive Officer, Seplat, also enumerated capital intensity; under-investment; delayed delivery of planned gas infrastructure; poor pipeline network; lack of cost-reflective tariffs and huge debts in the power sector; lack of clear gas fiscal terms for PSCs as issues to be addressed in enhancing gas-to-power drive in the country.

The Seplat CEO who described the drive as a revolution which direction is laudable and highly rewarding to the Nigerian people and the economy at large, however, said the plan could end a stillbirth if the challenges are not quickly addressed

Brown speaking at the Nigerian Gas Association (NGA) Industry Multilogues 2, its 12th biennial International Conference themed “Powering Forward: Enabling Nigeria’s Industrialisation Via Gas” held virtually said the Seplats’s new Sapele Gas Plant processing capacity (PC) is 75MMscfd, and increasing PC in the West to 540MMscfd (Oben and Sapele).

“Seplat currently contributes about 30 per cent of gas to power generation in Nigeria. Its ANOH Project is to add 300MMscfd capacity and unlock over 1,200MW of gas constrained power generation capacity.”

He, however, stressed the need to build institutional capacity to drive and sustain the transition, which is critical to attaining value and wealth advancement.

The Seplat CEO also called for the need to drive investments through liquidity pools such as the capital markets, bonds and PFAs as well as exploring a myriad of financing options to provide funding for gas infrastructure projects.

Brown, during the panel session dubbed “Nigeria’s Decade of Gas: The Industry Leadership Outlook”, said Seplat is strategically positioned to access Nigeria’s main demand centres, with its current well stock delivering 300 – 350MMscfd (Gross).

With respect to the company’s industry strides, it was, at the event, also honoured with the NGA Special Recognition Award for Seplat strong and outstanding support in its service to the Nigerian Gas Industry and the Nigerian Gas Association.

Commending Seplat and other players for their dedication to the growth of the sector, Audrey Joe-Ezigbo, President, NGA, said there is the need to continuously project and leverage the potentials of gas towards enabling and reinvigorating Nigeria’s industrial sector.

“Riding on the declaration by the Honourable Minister of State, Petroleum Resources, Timipre Sylva, to dedicate the new decade to the promotion and adoption of Natural Gas as the fuel of choice for national growth, it has become imperative for us to reinforce this paradigm, leveraging its benefits across diverse key sectors in Nigeria and across Africa.”

The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mele Kyari said the Corporation was committed to fulfilling President Muhammadu Buhari’s directive to boost domestic gas supply.

Represented by the Chief Operating Officer, Gas and Power, Yusuf Usman, Kyari stated that progress was being made on several of the projects, including the NLNG Train 7, with a foreign direct investment of between $3 billion and $5 billion; and the ANOH gas project, with a fully completed financing arrangement.

He listed others as the AKK, which he described as one the largest and most aggressive gas infrastructure that has ever been embarked upon in Nigeria, stretching 614 km from Ajaokuta, Abuja, Kaduna and Kano, and Lot B of the OB3 gas project, which is already producing 125 mmscfd of gas.

In his address also, the Lagos State Governor, Babajide Sanwo-Olu, harped on the need to have a cleaner, more liveable environment, noting that he is planning well for the state’s huge population, guaranteeing green jobs, reducing carbon emissions and working towards a healthy environment.

Sanwo-Olu maintained that there was the need to boost domestic utilisation of gas, adding that Lagos set up the Ibile Oil and Gas, privately driven, to transition the state to a low carbon economy by taking out firewood, kerosene and all the dirty fuels.

Seplat has numerous opportunities to scale up and diversify, some at relatively low cost. The company has a significant opportunity to lead Nigeria’s strategic dash to gas, replacing inefficient diesel and petrol generation, benefiting the economy with multiplier effects on gas demand.

According to Brown, gas offers higher profitability and cash drop-through than oil owing to lower royalties, taxes and costs; of which gas revenues are independent of oil price volatility, with 10+ year contracts offering long-term visibility.

He explained: “ANOH could increase gas production by 300MMscfd, with potential for further expansion. There is the potential to increase production at existing Oben and Sapele plants and to service industrial gas needs at prices higher than fixed-price Domestic Supply Obligation.

“The potential to end flaring and monetise gas by-products and develop LPG products for the local market to replace biomass as cooking fuel abounds.”

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