The latest report of Nigeria’s biggest indigenous oil firm, Seplat Energy has unveiled the firm’s exploration and production plans for the second half of 2021.
Seplat and other oil majors in the oil and gas industry were sent into a tailspin last year as the coronavirus pandemic coincided with a historic fuel demand shock, plunging commodity prices, unprecedented write-downs and tens of thousands of job cuts.
The torrent of bad news prompted the head of the International Energy Agency to suggest it may come to represent the worst year in the history of oil markets.
However, a 2021 rise in global oil and gas prices has caused a boomerang effect as Nigeria’s largest listed Oil & Gas firm by market value bounced to profit of N14.12 billion.
Drilling programme
In the first half of 2021, Seplat Energy completed the Oben-50 and Oben-51 gas wells, which are now producing at a combined rate of 60 MMscfd of gas and 4,000 bopd of condensates.
For the second half of 2021, Seplat have commenced location preparation for the Owu appraisal well in OML 53 and have completed project activities associated with the exploration well in Sibiri (formerly called Amobe).
The company also began drilling the gas wells at ANOH, with a total of four wells being planned for this year.
“We plan to drill two gas wells at Oben, which are expected to produce 60 MMscfd and 2,400 bopd combined,” Seplat said.
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Update on Amukpe-Escravos export route
The completion of minor tie-in works on the 160,000 bopd Amukpe-Escravos Pipeline, which are not within Seplat Energy’s direct control, have been slower than anticipated due to a combination of challenges associated with access to the Escravos terminal owing to Covid-19 protocols and providing clarifications with the owners of the pipeline.
“Our partner, NPDC owns a direct stake in the pipeline and are now actively working with Seplat Energy and the pipeline owners and their respective banks, to enable the final completion of the project,”Seplat Energy explained.
Sapele Gas Plant
The project is now expected to be completed in the first half of 2023, with Sapele’s processing capacity increasing from 60 MMscfd to 75MMscfd.
The upgraded facility will produce gas that meets export specifications, and the LPG processing unit module will enhance the economics of the plant, as well as ensuring that gas flaring is eliminated.
“We are currently accelerating the installation of the AG Booster Compressors at Sapele which will reduce the gas flare at the site,” Seplat Energy said.
Outlook for 2021
In 2021, Seplat Energy expects to produce an average of 48,000 to 55,000 barrel of oil equivalent per day, taking into account the impact of OPEC+ quotas.
The company insists it will continue to hedge against oil price volatility and expect a higher proportion of revenues to come from long-term gas contracts at stable prices.
“We have significant cash resources and will continue to manage our finances prudently in 2021, expecting to invest more than $180 million of capital expenditure across the full year, with $57 million already invested,” Seplat Energy said.
Transition plans
Seplat Petroleum’s CEO Roger Brown said the company is keeping an eagle eye on Nigeria’s energy transition.
Seplat will “selectively target opportunities in gas to power and solar energy, critical to providing an alternative to expensive diesel-generated electricity”, he said. Brown noted that Nigeria had the “highest cost of energy in the world”, owing to its reliance on generators.
Seplat will enter power markets selectively, the presentation said. It will look to combine gas with solar and explore the carbon offset markets.
