Nigeria LNG, Africa’s leading liquefied natural gas producer, is poised to experience a 12 per cent increase in its gas supply once a deal with Seplat Energy goes into effect, a top executive at the indigenous energy company told Bloomberg on Tuesday.
This boost comes as a result of a newly forged preliminary agreement marking a crucial step in overcoming operational challenges posed by rampant fuel theft.
Under the agreement, Seplat will send more than 150,000 tons of gas a month to the Nigeria LNG Ltd. plant, said Effiong Okon, who heads a Seplat subsidiary that operates a key gas project north of the facility. He noted that the amount is more than 12 per cent higher than the company’s last year’s monthly average.
The anticipated surge in gas supply offers a much-needed reprieve for NLNG.
The plant has been grappling with severely curtailed gas supplies due to the escalating menace of pipeline vandalism and fuel theft, which has significantly hampered its production capacity in recent times.
This agreement with Seplat marks only the second instance in NLNG’s history that it will be sourcing gas from a third-party supplier, underscoring the significance of this collaboration in the current operational climate.
Okon stated that both parties are currently engaged in finalising the intricate technical and commercial aspects of the deal.
He expressed optimism that gas flow to the NLNG plant is expected to commence in the third quarter of the current year, potentially bringing much-needed stability to the plant’s operations.
Seplat Energy has witnessed a 50 per cent surge in its gas production following its acquisition of assets from the Nigerian arm of Exxon Mobil Corp.
The landmark agreement with NLNG is also poised to inject vital revenue into Seplat’s $700m ANOH gas plant. Despite its completion, the ANOH plant has remained idle due to delays in the completion of a critical east-west pipeline intended to transport its output.
Katlong Alex, an analyst at the African Energy Council, hailed the deal as a “strategic convergence of need and opportunity.”
He emphasised that the agreement “enables Seplat to overcome infrastructure limitations, while helping NLNG tackle its persistent gas supply issues.”
This symbiotic relationship stands to benefit both entities significantly, ensuring a more reliable gas supply for NLNG and providing a crucial outlet for Seplat’s increased production.
Okon clarified that the agreement is intended to be a “short-term” solution, pending the eventual completion of the delayed east-west pipeline.
This suggests that while the Seplat deal offers an immediate and significant boost to NLNG’s gas supply, it is viewed as a temporary measure to mitigate the current challenges.
As of the time of reporting, NLNG had not issued any official statement or response regarding the agreement with Seplat Energy.
