Seplat Energy faces ₦2.6 billion in gas flare fines in the first three quarters of 2023

InfoStride News reported that Seplat Energy paid ₦2.6 billion in gas flare penalties during the first three quarters of 2023, as disclosed in the company’s financial statements. This marks a significant increase from the ₦1.3 billion paid for the same period in 2022.

The financial statement detailed that the operational and maintenance expenses encompass various costs, including maintenance, warehouse operations, security, community expenses, cleanup, staff-related expenses, fuel supplies, and catering services. Notably, it also accounted for a gas flare penalty of ₦2.6 billion, up from ₦1.3 billion in 2022.

In a bid to lower carbon intensity, Seplat Energy outlined a comprehensive plan called the “flares-out roadmap” aimed at reducing greenhouse gas emissions and improving energy efficiency. The company is determined to eliminate routine flaring by the fourth quarter of 2024. However, the reported carbon intensity for the stated period was 26.0 kilograms per barrel of oil equivalent (kg/boe), higher than the 22.8 kg/boe recorded in 2022 due to increased production.

The Sapele Flow Station significantly contributed to the higher carbon intensity, but the installation of the Sapele AG compressors is expected to reduce absolute emissions by around 40% once gas off-take operations commence. Additionally, the Jisike Flow Station has another gas compression project scheduled for completion in 2023, projected to capture an additional 9% of emissions by year-end.

In terms of gas revenues, Seplat Energy reported substantial growth in the first nine months of 2023, with gas revenue increasing by 12.3% to $93.9 million compared to $83.7 million in the same period in 2022. This growth can be attributed to several factors, including a slight increase in realized gas prices and a rise in sales volume. The average realized gas price increased by 2.5% to $2.87 per thousand standard cubic feet (Mscf), and gas production rose by 3.2% to 31.8 billion standard cubic feet (Bscf) compared to 30.8 Bscf in 2022. The improved average realized gas price was a result of higher negotiated prices with buyers during this period.

In a broader context, the combined sales of oil and gas for the first nine months of 2023 witnessed a significant increase of 31.0% to $810.4 million from $618.6 million in the same period in 2022. After adjusting for over lifts, which represent excess oil cargoes loaded, the total sales of oil and gas amounted to $682.5 million.

The surge in gas revenue can be primarily attributed to the increased sales volume and the higher negotiated prices achieved with buyers. This indicates a growing demand for Seplat Energy’s gas products and successful price negotiations, contributing to the overall revenue boost. During the mentioned period, the gas segment’s revenue constituted 13% of the Group’s revenue, compared to 16% in 2022.