Energy  

Seven Energy targets N200b investment in gas infrastructure next year

source:sevenenergy.com,Phillip Ihenacho

source:sevenenergy.com,Phillip Ihenacho

THE total investment of Seven Energy in the gas infrastructure in the country is expected to hit N200 billion ($1bilion) in 2016.
The Chief Executive Officer of Seven Energy, Philip Ihenacho, who disclosed this in Abuja, explained that the indigenous integrated natural gas development, production and distribution firm has so far invested about $800 million on gas infrastructure that extend from Port Harcourt, Calabar to Aba in its bid to extend gas groundwork in the country.

He further hinted that once the next phase is completed, Seven Energy would achieved a pipeline network of over 250 km and a processing plant that can process in excess of 200 million standard cubic feet a day of gas.

While decrying the dearth of capital for the building of infrastructure in Nigeria, Ihenacho said the company based its investments on long term off-take agreement with major manufacturing companies.

He added: “This is a substantial investment and by next year (2016), we would have invested over one billion dollars. It is not easy to raise capital for infrastructure and the success of our business is essential for Nigeria to continue to attract further investment in the sector. Success will bring further capital.”

He hinted that Seven Energy has agreement with Ibom Power, Lafarge cement and Calabar NIPP with upwards of 10 – 20 years duration.

The Seven Energy boss stressed the importance of unlocking money for the private sector through the instrumentality of international organisations like the World Bank and African Development Bank to enhance credit and provide guarantee to create credit worthy long-term contracts.

For Ihenacho, with 179 trillion cubic feet of gas which is the largest gas deposit in the continent, Nigeria has failed to optimize gas usage.

His words: “Nigeria’s large gas reserves is a good problem to have. In terms of gas, Nigeria sits with an incredible 179 trillion cubic feet of gas (2013), the largest proved gas reserves in Africa. Unfortunately, when it comes to utilisation and production Nigeria is lagging behind with only 14% being supplied to the domestic market, approximately 38% exported as LNG, 24% is flared, and the remainder is re-injected, used as fuel, or processed
into liquefied petroleum gas or gas liquids. There is a disconnect between the size of Nigeria’s reserves and the translation of these reserves into production.

Seven Energy is working towards capturing this opportunity by building gas infrastructure and promoting gas-based industry in Nigeria.”

He hinted that convincing investors to participate in gas infrastructure has been an arduous task, saying, “the initial challenge that we encountered is the necessity for long-term infrastructure. This requires long-term investment and convincing investors that the investment in Nigeria’s gas infrastructure will pay off. The second challenge we faced was to develop several reliable off-takers or customers of our gas and what they are willing to take and pay. The investment in infrastructure and the gas off-takers go hand in hand, because investors need to invest in a commercially viable operation.”
He said educating and enlightening local communities and employment of locals by oil and gas firms would in the long term stem the tide of pipeline vandalization.

He added: “We focus a lot of attention on education around the dangers of tampering with a gas pipeline. The gas pipelines that are vandalised quite often are vandalised out of error. We have been successful in protecting our infrastructure but not through around-the-clock security but through the support of our right-of-way communities and community education programmes.”
To boost investment in gas infrastructure, Ihenecho said government must, as a matter of urgency, make the Production Sharing Contracts (PSCs) terms for gas very clear.

He explained further: “Favourable fiscal terms are important to encourage investors and detail and incentives are required here. Secondly, to make the gas industry successful, the power sector needs to be bankable and commercial. The government needs to make sure that the power sector is a financially viable and that the power generating companies have sufficient revenue to pay for gas supply.

That is fundamental. Government should also encourage the sale of assets and the redistribution of held assets that are not being developed, to companies that are willing to invest. For example, in the Gulf of Mexico there’s licensing round once every six months or at least annually. The development of an open and transparent bidding and licensing process that happens on a regular basis would make a big difference.”



1 Comment
  • emmanuel kalu

    This is good for this company and the country. The government needs to look at this company and figure out a way to support it and help other local companies grow. The gas situation in Nigeria is something the government can quickly improve by creating huge demand for gas. we need to start pushing for gas usage by household and industries. This would create demand that would bring investors, it would also reduce the subsidy on kerosene and help our environment.

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