Seplat Petroleum Development Company Plc, Nigeria’s leading independent indigenous Nigerian upstream oil and gas exploration company, has expressed optimism that as the Trans Forcados Pipeline resumes full operations after its shutdown by militant activities in the nation’s Niger Delta regions, it would move quickly into the stability and growth phases of its recovery plans.
The company stated this as it reported a 43 percent decline in its first quarter revenues as a result of disruptions of its oil production due to damage to the Trans Forcados Pipeline, one of Nigeria’s largest grade of crude oil.
The Forcados Export Terminal was shut down last year due to renewed militancy activities which saw the Nigerian National Petroleum Corporation, NNPC, lose N27 billion in oil revenues.
The disruption led to a shutdown of the Terminal, forcing indigenous players in Nigeria’s oil and gas sector— Seplat, First Hydrocarbon, Nigeria Petroleum Development Company, Pan Ocean, Midwest Oil and Gas, Neconde and Aiteo—to stop oil and gas exploration and production. This also led to a declaration of force majeure by Shell, allowing it to stop shipments of the nation’s crude oil without breaching contractual agreements.
Speaking in an interview on CNBC Africa, Austin Avuru, managing director/chief executive officer, Seplat Petroleum, revealed that the company, due to its structure and personnel, responded with the required speed to headwinds occasioned by the drop in global price of crude oil and the militancy in the Niger Delta in order to survive and remain in business.
He said: “In the past six and half years, we’ve succeeded in building a very efficient company; a company with the right governance structure, right personnel, that can execute its plans. That is the key because when we were suddenly inflicted with the headwinds that we described—combination of drop in prices and outright production outage, because of the problems with Trans Forcados, the key thing was, how did we react? We reacted with the right amount of speed to create a business environment that enabled us to survive and remain in business.
He further revealed that revenues from its gas exploration accounted for more than half of Seplat’s first quarter earnings amidst the drop in its crude oil earnings.
“You know, the emphasis on Seplat’s gas business in public today, derives from the fact that for the past 15 months, we’ve produced just about 10% of our crude oil capacity. Otherwise, what is happening with the expansion of our gas business is that it has always been a part of our overall strategic plan since 2012.
“We’ve always said that by the end of 2017, we’ll like our gas business to contribute 25% to 30% of our bottom line. That’s what we promised at IPO, and that’s where we are now; it contributed close to 50% of our gross revenue in the first quarter of this year, largely because of our low crude oil production. But at full crude oil production, by the end of this year, it would contribute 25% to 30% of our bottom line; which has always been our target in the last five years.
“Now, in terms of numbers, as a midstream operator, we want to be able to process about one billion cubic feet (bcf) of gas per day. That’s our target. And that’s a lot of gas to process. We keep saying we want to stay where we are now, contributing about one-third in total domestic gas utilization and production in Nigeria,” he said.
Frontpage February 7, 2019