. To increase gas production by 390mm scf
By Clara Nwachukwu, Houston Texas
The Chief Operating Officer (COO) of Seplat Energies Plc, Samson Ezugworie, has said the company plans to end routing gas flaring in all its facilities by the second quarter (Q2) of next year, in line with its energy transition plan.
He also said Seplat is set to increase its gas production capacity by an additional 390 million standard cubic feet (mm scf) daily, up from the current 460mmscf to make a total of 850mmscf/day by year end.
Mr. Ezugworie disclosed this to journalists in an interview shortly after his participation in a panel session at the Africa Energy Forum, themed: “The future of Energy Transformation in Africa: Clean Energy and Business Sustainability,” held on the sidelines of Offshore Technology Conference (OTC) in Houston, Texas, U.S.A.
He said these plans are in line with the company’s environment, social and governance (ESG) targets to align with climate change realities.
He said: “Seplat Energy has made conscious efforts and invested in infrastructure to harness associated gas in order to end the flaring of gas in all our facilities by the second quarter of next year.
“We want to use gas to run the economy – gas-to-power, industrialisation, and liquefied petroleum gas (LPG) to boost the use of clean energy in homes instead of using coal or firewood.”
Regarding the production ramp up, Mr. Ezugworie said this is expected when the Assa North Ohaji South (ANOH) and Sapele gas plants come on stream.
He maintained that the entire 850mm scf of gas would be dedicated to the domestic gas market to support the economic growth.
He explained that the injection of the 850mm 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.
Seplat Energy has made conscious efforts and invested in infrastructure to harness associated gas in order to end the flaring of gas in all our facilities by the second quarter of next year.
Gas pricing and debt
On gas pricing and debt, he said this has remained a knotty issue in the industry which has discouraged most International Oil Companies (IOCs) from investing in gas infrastructure because the pricing needed to be right, especially as the piling of debt for gas produced was a major disincentive, making it a less profitable business.
He continued: “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 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 underscore the claim of low margins, the COO disclosed that although gas was 40% of the company’s production at the end of 2023, and liquids 60%, however, gas constituted only 11% of its revenue 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.”
