Seplat Sees Nigerian Gas as Solution to its Woes
Nigerian oil and gas firm Seplat Petroleum Development is focusing its efforts more on natural gas production which is less exposed to oil market difficulties, it said as it warned the market of a 23% and 30% drop in revenue for 2015.
In a trading statement and operations update issued on January 25, Seplat said that it expected revenues for the year ending December 31 2015 to rise from $550mn to $600mn, compared with the $775mn revenue reported for the same period in 2014. The company acknowledged that 2015 had been a challenging year, specifically mentioning falling oil prices. However, gas production was a bright spot from the firm, gaining an increased prominence, Seplat CEO Austin Avuru said.
"With a growing consensus that low oil prices are set to remain for at least the near term, we remain focused on what is in our control and steps we can take to maximise profitability," Avuru said. "Production strength, with past investment strategies translating into the up-tick in output, provides some cushion to lower oil pricing and our gas business takes on additional importance by providing a revenue stream that is de-linked to the oil price together with revenue continuity in the event of disruptions to third party oil export infrastructure."
Seplat recorded a substantial increase in gas production last year of 119%. Liquids production increased also by 20%. Together, the combined increases amount to a 41% increase overall in production.
The company credited a new gas plant with helping to ensure the sharp growth of its gas division. The Oben gas plant, which was commissioned in the middle of 2015, accounted for 332mn ft3/day gross deliveries at its peak in September 2015.
"Not only does this place Seplat as a pre-eminent producer of natural gas in Nigeria, the fact that 100% of volumes are dedicated to supplying key demand centres within the domestic market – enough to underpin over a third of Nigeria's estimated current active power generation – makes Seplat strategically important to Nigeria's current and future security of gas supply," the trading statement said.
Net production for Seplat overall in 2015 averaged 43,372 barrels of oil equivalent a day.
Erica Mills