Gas to power: Seven Energy opens negotiation with 10 power plants for gas sale agreement

As the drive for gas supply to rev up Nigeria’s power plants heats up, Seven En¬ergy, one of the country’s few gas exploration and processing companies, has entered into negotia¬tion with more than 10 power plants across the country with a view to sign¬ing gas sale agreements with them.

The company, which has already invested $800 million in gas process¬ing facilities, also plans to further expand its investment portfolio to enable it to meet the gas require¬ments of its potential customers.

Confirming this to BusinessDay, Philip Ihenacho, managing director, Seven Energy, who did not name the companies that his organisation was negotiating with, said they were set to deliver gas to the 500 megawatts (MW) independent power plant located in Calabar, Cross Rivers State, by second half of this year.

“We are currently constructing another gas pipeline to the inde¬pendent power plant in Calabar and by the second half of this year, the company would be delivering gas to the plant,” he said.

Ihenacho further explained that Seven Energy, which is already delivering gas to Ibom power plant, has constructed over 200 kilome¬tres of gas pipelines and installed the largest gas processing plant in sub-Saharan Africa which has the capacity to process 220 million standard cubic feet of gas per day.

The company has two operat¬ing areas – one in Akwa Ibom State, where it has a gas field, and has built a gas delivery network to be able to deliver gas into Calabar, and around Port Harcourt, and eventually to Aba. Recently, it reached agreement

with Oando to acquire the oil compa¬ny’s Easter Horizone Pipeline which is jointly owned by Oando and the Nigerian Gas Company (NGC).

Once the pipelines are completed, they would have a gas ring, called South Eastern Gas Ring, which is a crucial gas supply component.

“What we want is to cut off redundancy in the gas pipeline,” Ihenacho said, adding that there was greater utility in building a network than in building a single pipeline.

On how effective synergy can be achieved between the gas and power sectors, he said, “If you want to set up a power business in Nigeria, if you are going to build a gas-fired power plant, which is what majority of the plants in the country are, gas-fired generating plants are the quickest way to build generating capacity. Ni¬geria is a gas province. It is the logical way to go.

He also said that two things were needed. “The first is to find a location on the transmission network so that when you generate electricity you are able to evacuate and link into the electricity network. The sec¬ond thing you need to do is to find a source of gas. Without these two links, you would not have a power project that is viable. You need to evacu¬ate what you generate, and one of the largest consumables is going to be your source of energy, which in Nigeria is gas,” he said.

Ihenacho said the com¬pany was talking daily to new green fields power in¬vestors looking to establish in Nigeria so as to enter into power sale agreements that would last between 10 and 20 years.

He further observed that unless power companies had clear visions of their generation outlooks as well as sources of fuel, the pros¬pects would be unattractive, adding, “So we play a cata¬lytic role in enabling new power plant as well. He said the most impor¬tant thing was to have a long-term relationship with power generating compa¬nies from inception. “If it is green field, we would be talking to them and negoti¬ating with them for gas sup¬ply agreement so that they would be sure they would get sustainable gas supply and hopefully they would invest in power plants,” he added.

Shortage of gas, faults and maintenance work on plants have combined to reduce power generation in the country to 3,674.9MW from the 6,668.6MW available ca¬pacity of the power stations as of Monday last week.

Available generation records showed that over 2,000MW was the quantum of electricity that the system was losing due largely to gas shortage.

Since the handover of the Power Holding Company of Nigeria (PHCN) successor companies to new investors, the generation firms have been complaining of a drop in the supply of gas to fire their plants.

The development has led to erratic electricity supply across the country, although there have been promises of improvements in the near future.