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Nigeria’s Oando plans $350 mil gas processing plant

27 November 2015 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria’s Oando plans to build a gas plant for up to $350 million as it focuses on integrating gas production with its supply business, the head of the gas and power unit said on Thursday.

Bolaji Osunsanya, Managing Director of Oando Gas and Power said the plant, with a capacity to process 300 million standard cubit feet a day (scfd), will take 24 months to complete and cost $300 million to $350 million.

He said Nigeria had room to ramp up gas plants as current capacity was around 2 billion scfd, adding that its project was at the development stage to be launched in the first quarter.

London-listed Nigerian firm Seplat is also boosting gas capacity. It plans to increase gross output from around 120 million to 400 million scfd by 2017, as demand grows.

“We have done transport in the past, we are getting into (gas) processing right now,” Osunsanya told Reuters in an interview. “We are working ourselves up the chain.”

Oando’s gas and power unit reported a net income of $19 million for the nine months to September, down from $22 million the previous year.

Lagos-listed parent Oando, with interests in oil exploration, terminals and oil trading, has said it was seeking approvals to sell its gas and power investment to cut debt and raise up to 80 billion naira from shareholders.

Two years ago, Africa’s biggest economy broke up its monopoly on power generation and distribution by privatising the sector, hoping to attract foreign investors.

But the amount of power produced has stagnated since, failing to reach a 2012 peak of 4,500 megawatts of electricity due to gas constraints, plant outages and tripped circuits, according to Transmission Company of Nigeria.

Osunsanya estimated Nigeria will need around $55 billion over the next seven years to develop gas infrastructure to meet growing demand, which would include building new pipelines, processing plants and drilling of new wells.

He estimated demand at 5 billion scfd, of which 3.5 billion was needed for power and the rest for other uses. However, half the 7.5 billion scfd gas generated was flared or reinjected into the ground due to inadequate pipelines for distribution.

 

(By Chijioke Ohuocha. Editing by David Evans)

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Oando aims to pick up Nigerian assets from embattled majors

5 October 2015 Comments (0) Africa, Business, Latest Updates from Reuters

LONDON (Reuters) – Nigerian-based oil producer Oando wants to double its oil output by 2019, targeting assets likely to be shed by majors hit by the crude price drop.

Chief Executive Wale Tinubu told Reuters in an interview on Monday the retreat among the world’s major producers from the onshore Nigerian oil industry would likely leave a lot of assets on the market.

“When you compare the size of the resource base (the majors) have in Africa vis-à-vis the rest of the world, it’s clear that they will have to do Nigerian divestments and we are the natural buyer of choice,” he said.

Oando, which produces some 50,000 barrels of oil a day, already bought ConocoPhillips’ Nigerian assets for $1.5 billion in July last year, with a view to meeting its target of hitting 100,000 bpd by 2019.

“We are driven, we are keen and we are on the lookout for opportunities and we are confident of securing opportunities towards increasing our reserve base and our production,” he said.

The price of oil has halved to below $50 a barrel over the last 12 months, as global supply has outstripped demand.

“We’re betting on an eventual oil price rise and we see the best time for securing those reserves as being now and not when the market rebounds,” Tinubu said.

Nigerian onshore oil projects have been plagued by industrial scale oil theft, security problems and oil spills, the latter having become a growing legal liability for major oil companies.

Nigeria is Africa’s largest oil producer and contributes some 2 million barrels a day to total world supply.

Shell has already sold some of its Nigerian oilfields and said last week it will focus its future investments there on natural gas. Its French peer Total agreed in March to sell a stake in an onshore oilfield to Nigeria’s Aiteo Eastern E&P.

Local oil producer Afren Plc, which went into administration in July, owns oilfields in Nigeria, but Tinubu said Oando was not considering them.

“We looked at it but we’re not really interested. It doesn’t satisfy our criteria we believe there are many better opportunities out there,” he said.

 

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