Seplat Petroleum Development Co. and Nigeria’s state oil company will raise $700 million for a joint gas project scheduled to start production next year as the government steps up plans to reduce the country’s reliance on oil.
The project, known as Assa North-Ohaji South, is one of seven to boost gas production and infrastructure development in the West African nation, the continent’s biggest producer of crude. ANOH Gas Processing Co., which is owned by Seplat and the Nigerian Gas Co., a unit of the Nigerian National Petroleum Corp., will develop, build and operate the plant in southeastern Imo State.
Seplat and Nigerian Gas will provide 60 percent of the funds as equity, while ANOH will source the balance as debt, Seplat Chief Executive Officer Austin Avuru said in an interview Wednesday in the commercial capital, Lagos. “Both parties already have each contributed $100 million in equity,” Avuru said. “There will be another equity injection and at the back end of it will be debt.’’
The plant, which will process wet gas from the unitized upstream fields at OML 53 and OML 21, has an initial capacity of 300 million standard cubic feet per day. It’s scheduled to begin production by the last quarter of 2020 and the first supply is targeted in 2021, Avuru said.
Nigeria’s government is encouraging investments in gas infrastructure to improve supplies to power companies and diversify the economy away from oil, which currently accounts for the bulk of revenue.
ANOH will target local customers and has the capacity to double production “depending on domestic demand and the availability of feeds including third-party gas,” Avuru said.
Lagos-based Seplat, meanwhile, will more than double capital spending to $200 million this year from 2018 as it seeks to take advantage of “relative stability’’ in the Niger Delta region, he said. “If Niger Delta is stable, the rest is easy for us to handle.’’
The firm, which is listed on the London and Nigerian exchanges, will spend about 70 percent of its capital budget on drilling after a three-year lull, Avuru said. The rest will be for “facilities and gas development.”
Seplat is targeting output of 49,000 to 52,000 barrels of oil equivalent a day this year and “will probably start seeing a gradual increase in production’’ from next year on sustained expenditure and stability in the delta, he said.
The energy company’s shares rose 0.6 percent to 123 pence as of 11 a.m. in London to extend gains this year to 7.9 percent. It traded unchanged at 590 naira in Lagos.