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Wednesday, August 21st, 2019

Nigeria's Seven Triples its Gas Supply Deal

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by September 27, 2017 General

Nigerian producer Seven Energy said September 25 that a gas sales deal by its subsidiary Accugas to supply the Calabar power plant in southeast Nigeria entered into force September 22.

The gas sales agreement is supported by a World Bank partial risk guarantee (PRG), a financial instrument also backed by the Nigerian government, that will secure the supply of up to 131mn ft3/d of natural gas to the Calabar Nigerian Integrated Power Project (NIPP). Seven says the gas supply will enable Calabar consistently to generate up to 561 MW of electricity to the national grid, 15% of Nigeria’s current power production. It said this arrangement, which guarantees payments to Accugas, is the first of its kind for gas supply in Nigeria and stabilises the ‘gas to power’ value chain.

A NIPP is a power plant originally under full state control that has been privatised, with investors committing to modernise the unit and buy fuel.

To date, Accugas has supplied gas to Calabar NIPP under an interim gas sales agreement, at an average so far in 2017 of only 45mn ft3/d. That will now be tripled under the firm supply deal now in place. The Calabar GSA includes a 90 working day grace period during which the PRG cannot be called on.

Funding from Singapore’s Temasek

Seven Energy told NGW at the Nigeria Gas Summit conference in Lagos that Calabar NIPP has operated since 2015.

However Seven’s senior midstream commercial manager James Odiase indicated to NGW that Calabar has not been fully operational, but that this now will change as a result of the commitment made both by the Nigerian federal government and the World Bank.

Speaking to NGW at the Lagos event September 26, Odiase said the PRG and revised gas supply will more power will be added to the current national grid, adding it was important that power supplied to the national grid be paid for, so that the investment plans to boost the country’s power supplies can be fulfilled.

In his paper to the conference, Odiase said it had taken Seven Energy ten years to achieve gas sales of 200mn ft3/d (2.07bn m3/yr). During that decade, Seven had developed a robust infrastructure ring in southeast Nigeria (Akwa Ibom and Calabar) and acquired $1bn through equity and debt facilities in partnership with firms like the UK Africa-focused bank Standard Chartered, Singapore’s sovereign wealth fund Temasek, and UK contractor Petrofac. 

Seven Energy also announced September 25 that CEO Manish Maheshwari had been appointed to its board of directors, along with four new non-executive directors. Two directors stepped down from the board as shareholder representatives of (Basrain fund Asma Capital managed) IDB Infrastructure Fund II and the UK’s Petrofac respectively, one of whom has since been replaced by Asma Capital’s general counsel Satjeet Sahota. 

Omono Okonkwo

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