Savannah, AMOCON sign new gas deal

Savannah Energy PLC has announced that its 80 per cent indirectly owned subsidiary, Accugas Limited, has entered into a Natural Gas Sales and Purchase Agreement with Amalgamated Oil Company Nigeria Limited for gas produced in the OML 156 sole risk petroleum lease area, for onward sale to its customers.

In a statement, it disclosed that in 2022, Accugas processed and transported an average of 145 MMscfpd of gas through its pipeline network, with all gas sourced from Savannah’s 80 per cent indirectly owned Uquo gas Field 1.

“Gas is processed at Accugas’ 200 MMscfpd Uquo central processing facility for onward transportation to customers through its c.260km, up to c.600 MMscfpd transportation capacity pipeline network,” it stated.

It said the NGSPA with AMOCON represented the first time that Accugas would be supplying gas to its customers that had not been produced from the Uquo gas field.

The energy firm claimed, “Gas purchased from AMOCON does not require processing by Accugas and therefore does not utilise available capacity at the Uquo CPF.”

According to Savannah Energy, under the terms of the NGSPA, Accugas has agreed to purchase up to 20 MMscfpd of gas from AMOCON over the course of the next ten years.

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“The cost of connection to Accugas’ infrastructure has been borne by AMOCON, with the gas being delivered from a new AMOCON-owned 140m pipeline connecting AMOCON’s Early Production Facility to Accugas’ existing pipeline network,” it added.

However, it noted that under the terms of the NGSPA, all capital expenditure required for the AMOCON EPF-to-Accugas pipeline was borne by AMOCON and Accugas had not incurred any additional capital expenditure concerning the project.

It further stated that the contract was already operational and gas supply to Accugas had stabilised at approximately 20 MMscfpd.

The Chief Executive Officer of Savannah Energy, Andrew Knott, said, “Since we announced our intention to acquire our ownership interest in Accugas in 2017, Accugas has recorded six consecutive years of growth in total revenues at a compound annual growth rate of 21 per cent. We are now contracted to supply gas to up to 24 per cent of Nigeria’s thermal power generation capacity (up from 10 per cent at the time of acquisition), as well as key petrochemical and cement factories. We are performing a critical service to the Nigerian economy.

“By providing a commercial route to market for otherwise stranded gas resources, the deal with AMOCON represents a new source of growth for Accugas.”

According to him, the deal has the potential to serve as a template for the commercialisation of other stranded gas resources in the Southeast, which represents a potentially significant opportunity for Accugas.

Henry Falaiye | Punch

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