Of indigenous firms leading the gas-to-power charge
On August 14, 2014, President Goodluck Jonathan commissioned the Uquo Gas Processing Facility, one of the biggest projects of its nature undertaken by independent indigenous partners in sub-Saharan Africa.
Crucial to Nigeria’s aspiration to boost power supply to businesses and homes is natural gas, and the country boasts over 180 trillion cubic feet (Tcf) of discovered reserves and up to 600 Tcf of undiscovered gas reserves, but requires massive investment to unlock the value in the resource.
By 2018, 50 percent of domestic gas production to power the economy will come from Nigerian independents, Austin Avuru, managing director, Seplat Petroleum Development Company, also one of the leading indigenous firms, said at a conference in August.
The Uquo gas processing facility located in Esit Ekit, Akwa Ibom State, is capable of generating 1,000 megawatts (MW) of electricity, more than a quarter of the country’s current generation capacity. The facility can produce over 200 million cubic feet of gas per day.
The N90 billion facility is a joint venture project between two indigenous Nigerian independent oil and gas companies Seven Energy International Limited and Frontier Oil Limited, who are involved in the Uquo field development. The Uquo field is a gas field with proved plus probable reserves of approximately 667 billion cubic feet of gas.
Frontier Oil Limited, which was awarded the field in 2003, during the marginal field programme, is the operator while Seven Energy provides technical services and 100 percent of the funding.
An indigenous oil and gas exploration and production company formed in 2001, Frontier Oil aims at becoming a leading indigenous Nigerian gas producer in 2014, as well as one of the leading indigenous exploration and production companies by 2020. The company hopes to achieve this by producing oil and gas profitably and responsibly for the benefit of all stakeholders.
Seven Energy is an indigenous Nigerian oil and gas exploration, development, production and distribution company with a vision to be the leading supplier of gas to the domestic market for power generation and industrial consumption.
Speaking at the commissioning, President Jonathan commended the joint venture partners for the project and the impact it will have on Nigeria’s aspiration for sustainable power supply.
“We are happy with what we have seen today. Seven Energy and Frontier Oil deserve commendation for combining their individual capacities to deliver this project which will have multiplier effect on the economy such as increasing national power output, employment opportunities for the host communities and Nigerians and additional revenue for both the Federal Government and Akwa Ibom State,” he said.
Philip Ihenacho, CEO of Seven Energy, said the Uquo gas project was a reflection of the company’s unique focus on the emerging Nigerian domestic gas market.
With 64 percent of its reserves and resources of 345 million barrels of oil equivalent (MMboe) being gas, Seven Energy is particularly focused on gas developments.
Nigeria, which is home to the world’s ninth biggest gas reserves, has seen drastic drop in power supply in many parts of the country as it grapples with gas supply shortfalls. With the recent privatisation of the power sector and ongoing reforms in the sector designed to incentivise investment in power generation capacity from the existing 6,000MW to 40,000MW by 2020, demand for gas is expected to grow from 1.8 billion cubic feet per day (Bcfd) in 2012 to 7.2 Bcfd in 2025, equivalent to 11.3 percent increase per annum.
“First commercial gas deliveries commenced in early 2014, to the 190 MW Ibom Power station. With the addition of deliveries to the 560MW Calabar NIPP power station, we will be supplying gas to more than 10 percent of Nigeria’s power generation capacity. In total, we have 1.3 Tcf of long-term gas sales agreements, with a duration of between 10 and 20 years, in place,” said Ihenacho.
“It is one of the best gas plants in Nigeria. This is the biggest of such a project in sub-Saharan Africa and we are very proud of it,” said Dada Thomas, managing director, Frontier Oil.
Noting that Akwa Ibom State is enjoying steady electricity supply in Nigeria as gas is being supplied to Ibom Power plant and generating about 100MW, he said: “What is the impact of that? It means that the hairdresser can do her hairdressing. It means that the welder can do his welding. It means that the factory can carry on production. It means that the people in the office can function because their computers will have power and all those things have an impact on the ability of each individual to produce; therefore an impact on productivity and a general impact on the overall Nigerian economy.”
Commenting on the project, Godswill Akpabio, governor of Akwa Ibom State,said the state was happy to provide the right environment for both Seven Energy and Frontier Oil to operate in the state.
The Uquo JV commenced commercial gas production in 2012, and aims at, among other things, producing in excess of 200mmscfd of gas and supplying gas to power plants and industries in the Niger Delta region.
The Uquo JV has commissioned the Train 2 of the Uquo Gas Processing Facility in readiness for supplying 131 MMscfd of gas to the Calabar NIPP power station in the fourth quarter of 2014.
“With Trains 1 and 2 of the Uquo Gas Processing Facility fully operational and once the connecting pipeline to Calabar is commissioned, the joint venture will be supplying gas to provide 750MW of electricity generation capacity at the Ibom Power station and the Calabar NIPP power station, equivalent to some 10 percent of Nigeria’s generating capacity,” he said.
FRANK UZUEGBUNAM & FEMI ASU