Seplat says expansion of its domestic natural gas business a priority

 

 

 

SEPLAT Petroleum Development Company Plc has prioritized expansion of the domestic natural gas business to improve on its revenue.
Briefing shareholders during the company’s 4th Annual General Meeting (AGM) held in Lagos, Chief Executive Officer, Austin Avuru explained that, Seplat privatized expansion of its domestic natural gas business which provides a revenue stream that is de-linked from the oil price, and underpinned by the strong fundamentals of high demand and increasing pricing.
Avuru said eliminating the outstanding NPDC receivables balance remains an absolute priority.
In his notes on the 2017 results, Avuru admitted the difficulty operating environment of 2016 stated that, additional to a difficult global oil market backdrop, Seplat business has had to contend with unprecedented operational challenges due to interruptions and these are reflected in the company full year results.
According to him, “whilst force majeure at the Forcados terminal has materially affected our oil production, I am particularly pleased to see the growth in our gas business which in 2016 exceeded the $100 million revenue milestone demonstrating its robustness and providing a solid base from which to grow. It is easy to forget that in 2013 gas revenue were only $18 million, which shows how far we have come”.
The company has established a longer term alternative export route through the Warri refinery jetty and are nearing completion of upgrade works to the infrastructure enabling a doubling of barging volumes to a steady 30,000 bopd gross for second quarter of 2017.
The CEO said, “Alongside this, we are collaborating and supporting government on completion of the Amukpe to Escravos pipeline that will offer a third export route through the Escravos terminal. With multiple export routes expected to be operational during the second half of 2017, we will have significantly de-risked our route to market”.
To significantly improve its alternative routes and avoid revenue losses from shut-ins, Avuru pointed out that they are also, in addition to the Warri and Forcados export routes, supporting the National Petroleum Investment Management Services (NAPIMS) a 100 percent subsidiary of the Nigerian National Petroleum Corporation (NNPC), he said on completion of the 160,000 bopd capacity Amukpe to Escravos pipeline that will offer a third export route through the Escravos terminal. With the intention is to utilize all three to ensure there is adequate redundancy in evacuation routes.
Reviewing the company’s performance for 2016, Avuru stated that, gas revenue increased significantly year on year to $105.5 million compared to $76.9 million that was recorded same period in 2015.
He explained that trend was driven by a 19 percent increase in the average realized gas price to $3.03/Mscf compared to $2.55/Mscf in 2015, which shows an increase of 11 percent in working interest production to 95 MMscfd (34.7Bscf) compared to 86 MMscfd (31.3Bscf) in 2015.
Giving details of the company’s challenge in the year under review, he explained that it impacted on revenue due to the extended Trans Forcados shut-in as well as volatility in global oil prices.