Nigerian Seplat Says Gas Outlook 'Positive'
Nigerian independent oil and gas company Seplat announced through its Stability Performance Growth report June 26 that its long-term gas outlook in Nigeria remains positive and strong. The company says that conventional diesel off-grid power generation is expected to be displaced, presenting its gas business with a significant opportunity.
Seplat is looking to exploit the capacity deficit in thermal power generation, which provides immediate headroom to place additional gas volumes in the market. There is significant installed but non-operating generation capacity.
As of June 25, the Nigeria Electricity System Operator (NESO) announced that the country's electricity generation has been hovering between 2.6 GW and 3.8 GW on a daily basis since the beginning of June 2019.
According to NESO, Nigeria's installed generation capacity stands at 12.91 GW. Available capacity is at 7.653 GW. Transmission wheeling capacity is at 8.1 GW. The peak generation ever attained is 5.375 GW.
Nigeria generates most of its electricity from gas-fired power plants, while output from hydropower plants makes up about 30% of the total.
Seplat is focused on bridging this gas-to-power gap through its 300 mn ft³/day Assa North/Ohaji South (ANOH) gas processing plant in Imo State, Nigeria's southeast region, for which the final investment decision was taken in Q1 2019.
The ANOH gas and condensate field straddles OML 53 (Seplat 40% and operator) and OML 21 (Shell JV). ANOH is unitised 50:50 across the two blocks.
The Nigerian Gas Company will construct a 24-km spur line to the Obiafu-Obrikom-Oben gas pipeline linking ANOH to the Escravos Lagos Pipeline System and West African Gas Pipeline as evacuation routes for gas at over $3.0/'000 ft³.
Other companies like Shell and Pan Ocean are focusing on the same pattern, building more processing plants to meet gas demand, with gas projects like Utorogu II and Ovade Ogharefe II.
Installed gas-fired generation capacity is woefully under-used. Government policy is focused on addressing this and extending access to electricity, with the goal of reaching 90% of the population by 2030.
However, the failure of the government to address obstacles would lead to greater private or state-level provision of electricity, resulting in greater gas demand.
As of 2018, Seplat grew its gas business revenues to $156mn, or 21% of total revenues. Nigeria holds 37% of total proved gas reserves on the continent, the majority of which is concentrated in the Niger Delta region.