• Wednesday, April 24, 2024
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Seplat eyes third quarter for first gas from $650m ANOH project

Seplat eyes third quarter for first gas from $650m ANOH project

Seplat Energy Plc has announced it is targeting the third quarter of 2024 to commence gas production from its $650 million ANOH Gas Processing Plant.

The feat if achieved will allow Nigeria’s biggest energy company by market value to ramp up gas production by roughly twofold once operations start.

“Clear progress is also being made on the important ANOH gas project, with the first gas expected in 3Q 2024,” Roger Brown, CEO of Seplat said in the company’s annual statement.

Upon commencement of operations, ANOH will provide two income streams to Seplat.

First, the sales of wet gas from upstream to ANOH Gas Processing Company Limited (AGPC). The ANOH gas plant has a design capacity of 300 mmscf/d. Seplat will report our net share (40% working interest) of wet gas production as working interest production.

“We note that gas sales will benefit from lower opex than our current gas operations by virtue of not having to bear the burden of midstream processing cost,” Seplat Energy said.

It added, “Secondly, as a 50 per cent owner in the AGPC incorporated joint venture, Seplat will receive dividends from the AGPC’s profits”.

Seplat Energy said it anticipates a 6-month ramp-up to plateau production after the first gas, during which period AGPC will establish plant stability and offtake performance.

“Incorporating these elements, we estimate that AGPC should provide a dividend stream net to Seplat of c.$30m per annum,” Seplat Energy said.

The dividends are expected to begin approximately 12-18 months after first gas.

“We expect that a $10/bbl change in the oil price would change the expected dividend by c.$5m, while a 1% change in production deferment changes the expected dividend by c.$1m; both figures are net to Seplat,” the company noted.

The ANOH gas plant achieved mechanical completion on 29th December 2023 without recording any Lost Time Incident (LTI) across 11 million hours.

“All upstream wells required for first gas were completed by the operator, SPDC, in 2023, with well deliverability tests conducted in Q1 2024. Work is ongoing to connect the wells to the gas plant,” Seplat Energy said.

The government partner is the Nigerian Gas Infrastructure Company (NGIC), a subsidiary of the NNPC Ltd, which is responsible for delivering the pipelines required to transport the gas from ANOH to the demand centres, including the 23km spur line and the Obiafu-Obrikom-Oben (OB3) pipeline.

Conncerning OB3 pipeline, Seplat Energy said grouting of the unconsolidated formation along the tunnelling pathway on the River Niger has been completed.

“Our partners recently reaffirmed their guidance for completion of construction of the OB3 pipeline in 1Q 2024,” the company said.

According to the $20bn ‘Decade of Gas’ plan, between 2020 and 2030, gas demand is expected to grow at a compound annual growth rate of 16.6 percent annually driven by major projects such as NLNG Train 7 in the base case, Nigeria/Morocco pipeline, NLNG Train 8, AKK pipeline-related projects in the high case.

Other projects from which the Decade of Gas was meant to be achieved include Brass Fertilizer and all under-construction power plants. Gas supply for the decade of gas would derive from specific onshore NAG and shallow water AG/NAG development projects.