Seplat Energy Targets Q3/2024 for ANOH Gas Project Completion

Seplat Energy has recently disclosed that the Assa North Ohaji South (ANOH) project, originally scheduled for completion in the third quarter of 2024, has encountered additional delays. This information was unveiled within the company’s unaudited financial statements for the third quarter of 2023. The delays have primarily arisen in the context of two critical infrastructure projects managed by third-party entities, namely the OB3 pipeline and the Spur line.

The official report from Seplat Energy elucidates this situation: “ANOH first gas now expected in 3Q-2024. Further delays during construction of the project, particularly the two critical infrastructure projects managed by third parties: OB3 pipeline and Spur line.” These unexpected impediments have necessitated a revised timeline for the ANOH project’s delivery.

Seplat Energy’s Chief Executive Officer, Roger Brown, expressed his views on these third-party-related delays. He stated, “Ongoing third-party delays to ANOH’s export infrastructure remain a source of frustration, but we are confident that the quality of the project will support dividend growth for Seplat in the coming years as we diversify the business and deliver on our strategy to provide more affordable energy for Nigeria.”

In their most recent report, Seplat Energy shared insights into the second quarter of 2023, highlighting the critical milestones set for the ANOH gas project. These included completing the mechanical work at the AGPC plant, drilling and connecting upstream wells, spanning a river with the OB3 pipeline, and establishing the connection between the OB3 pipeline and the ANOH gas plant through a spur line.

However, a multitude of factors, including security concerns, adverse weather conditions, and performance issues with contractors, have conspired to hamper progress on the project. As a result, developments have proceeded at a slower pace than originally envisioned.

Despite these challenges, the AGPC plant is nearing the final stages of completion, with 95% of the work already accomplished. The company holds the expectation of achieving mechanical completion by the end of 2023. It’s notable that the AGPC project has maintained an exemplary safety record, with an impressive 10 million man-hours of work executed without any lost-time incidents (LTI).

Furthermore, the report indicates that by the first half of 2023, the drilling of the third well had been successfully completed, and work on the fourth well was well underway, with an anticipated completion in the near future. Additionally, surface facilities designed for the transportation of wet gas to the AGPC plant are currently under development, with expectations of completion in the coming quarter, facilitated by the upstream operator, SPDC.

The crucial aspect of pipeline infrastructure, managed by the government partner NGIC, plays a pivotal role in the ANOH project. This entails the construction of the 23km spur line and the OB3 pipeline. However, the progress on the OB3 pipeline has lagged behind the original schedule, with a revised completion date now set for the end of 2023, primarily due to delays in tunnelling operations.

Concurrently, the Spur Line project has reached an overall completion rate of 70%, with an expected finish by the end of 2023. Nonetheless, given the array of challenges encountered, there is a likelihood that the revised completion date of Q1 2024 will be the more realistic timeline for the Spur Line project.

In terms of anticipated financial returns, it is worth noting that the AGPC plant is expected to yield Seplat Energy an estimated annual dividend of around $30 million, approximately 12-18 months after the first gas is achieved. This forecasted income underscores the significance of the ANOH project to Seplat Energy’s financial outlook and long-term growth strategy.

In conclusion, Seplat Energy’s ANOH project, while facing various challenges and delays, remains a pivotal initiative for the company’s vision of diversifying its energy business and contributing to the provision of more affordable energy solutions for Nigeria. The company’s commitment to safety and the quality of the project underscores its determination to overcome these challenges and realize the long-term benefits of the ANOH project. With ongoing efforts and the support of both internal and external stakeholders, Seplat Energy aims to navigate through these delays and ultimately bring the ANOH project to successful fruition.