Seven Energy International Limited, an independent Nigerian oil and gas exploration, development and production company founded in 2004, has increased its gas investment in the country to $825m.
The Chief Executive Officer of the company, Mr. Phillip Ihenacho, in an interview with our correspondent on Tuesday, put the company’s gas investment at $600m before now.
This, he said, had been expanded to $825m following the signing of a $225m syndicated medium-term facility between Accugas Limited, a gas processing, marketing and distribution company owned by Seven Energy International Limited, and a number of banks, including United Bank for Africa Plc, First Bank of Nigeria Plc, Stanbic IBTC and FCMB Plc.
FBN Capital Limited, a subsidiary of FBN Holdings Plc, acted as the global coordinator bank, financial modelling bank and also undertook the role of de-facto financial adviser to the borrower.
Ihenacho said, “Our key focus is gas and as a company, we have a unique focus on the emerging Nigerian domestic gas market. As such, we have invested in the region of $600m in the South East Niger Delta alone.
“Accugas is the subsidiary we use to actually build and own pipelines and gas processing plants. What we do is as well as drilling for gas, we actually process the gas. So, a gas processing plant is like a refinery to refine the gas so that it’s suitable to be put into pipelines and delivered to the consumers. What we do is we drill for the gas, process the gas and put it into a pipeline and deliver to the customers.”
Speaking during the refinancing and expansion facility signing ceremony in Lagos, Ihenacho said $225m loan would be utilised towards refinancing the existing $55m debt secured by Accugas gas pipeline project in Akwa Ibom, while the $170m balance would be used in part-financing the cost of expanding the company’s gas-processing facilities.
He added that a new gas pipeline that would supply gas to the Calabar NIPP power plant would also be built from the $170m balance.
Ihenacho described the Calabar project as the second phase in Accugas’ gas processing and distribution development programme aimed at bringing the substantial gas reserves from the South East Niger Delta to market to meet the growing energy demand from power plants and industrial users in the region.
The project, according to him, involves the construction of a 37km gas pipeline from the Uquo gas field in Akwa Ibom State to Oron for delivery of 131 MMscfpd of gas to the 560MW power plant in Calabar. Construction of the new pipeline, he said, was scheduled to be completed in July 2014.
Seven Energy has joint venture interests in the Uquo and Stubb Creek fields, and onshore in the Niger Delta, Ihenacho said.
Commenting on the new facility, the Seven Energy boss, said, “The successful signing of the Accugas financing clearly shows the confidence that the financial institutions have in Accugas and Seven Energy, as well as the prospects for the Nigerian gas market”
In view of the huge investments in gas development by the company, Ihenacho decried Nigeria’s second largest global importer of diesel status and said it was important for the country to consume gas that it had in abundance instead of importing.
He said, “Nigeria is the second largest importer of diesel and we are sitting on crude oil and gas. We should be consuming what we have and exporting, we should not be importing. It is one thing to use diesel to fuel cars, it is another to be using diesel to generate electricity, it is extremely expensive and ten times the cost of generating electricity through gas.”
As such, he said the company was investing in gas for the domestic market rather than gas for export.
The Chief Financial Officer, Seven Energy, Mr. Bruce Burrows, who corroborated Ihenacho, said, “The completion of the Accugas financing marks a major milestone in the project’s evolution. With construction of the Ibom gas pipeline (Phase 1) now complete and on track to deliver gas to Ibom Power Plant from April 2013, we are now embarking on Phase 2 with construction of the Calabar gas pipeline already commenced.”
Burrows commended the professional and efficient work by the FBN Capital team and other parties, and thanked all the lenders for their continued support in bringing the company closer to finalizing a project of huge importance to power supply in Nigeria.
The Managing Director, Accugas Limited, Mr. Stephen Tierney, who also confirmed the investment figure, noted NDPHC’s role in the Accugas financing, particularly in working closely with Accugas in getting the transaction towards the finish line, and in providing the financial support required by the banks.
The Executive Vice President, Institutional Banking, First Bank of Nigeria Plc, Mrs. Bashirat Odunewu, who commented on the transaction, said, “First Bank is very proud to invest in Accugas Limited, as the project is uniquely aligned with the Federal Government’s vision of harnessing the nation’s immense gas reserves, and developing the country’s domestic gas supply infrastructure.’
She added that the project would assist in bridging the gas deficit for power generation in the country.
The Managing Director/Chief Executive Officer, FBN Capital Limited, Mr. Kayode Akinkugbe, said, “FBN Capital is very proud of the instrumental role it played in assisting Accugas to structure and arrange the financing for the project.”
“The successful signing of this financing shows that lenders see Accugas as a robust project that will bring sound economic benefits to Nigeria.”
