The Chief Executive Officer of Seplat Energy, Roger Brown, in this interview on the sidelines of the recently held Offshore Technology Conference in Houston, Texas, spoke about the company’s energy transition initiatives. Obinna Chima brings the excerpts:

What is your take about participation in this year’s Offshore Technology Conference (OTC)?

It is great to be at the OTC. But it is unfortunate that a lot of government partners are not here. But at least there is a good representation. It was nice to see the exhibitions and good to see some of our contractors that we don’t get to see that often and we saw a lot of technologists that are key to what we do. With our transition, we must get super-efficient at what we do, particularly in the upstream and technology is very critical.

The theme around this conference is energy transition and we are aware that Seplat is doing a lot around that. You had a name change recently. Can you tell us some of the things you are doing around energy transition and secondly you released your results recently and what we saw was that you are making huge divestments from your Ubima field, can you tell us what informed that decision?

When you look our business, you look at it from three legs. The first leg is what we are known for which is the upstream oil and gas; we are going to continue doing well into the future because we think it is very relevant and in Nigeria, we have a lot of reserves. But we want to decarbonise that element of business by being more efficient. Like using solar to power instead of using oil or gas. The second leg is an area that we developed a long time ago in 2012, which is the gas business.

It is gas processing. At the moment we have open gas plant and we are finishing the Assa North-Ohaji South (ANOH) by the middle of next year and we are also operating the Sapele Gas plant at the moment, putting on LPG to broaden that second pillar of our business which is gas processing going down into electricity following the conversion of molecular into electron. That then provides a bridge to the renewable side, which is the third leg of our business.

And that really is about looking at what renewable technologies that would dovetail into our business would be the best for Nigeria going forward. Our view is that solar is probably the most likely for us in the country, even though there would be some wind opportunities. So, I think for our business model, solar is probably going to be the one to be favoured. But we are doing studies and we are working through that; we have a new energy division that we put together and we would be making some investments in the coming months or years. But I keep repeating that there are three legs to the story.

Now, to the question around Ubima and why we divested, I think what you would see with Seplat going forward is that we are respecting government processes as you are aware that the acquisition of Mobil Producing is still subject to government concerns. But there would be certain key assets which we are focusing on. For Ubima, we inherited that asset when we acquired Eland Oil and Gas and there was a small investment on that marginal field. On that marginal field, we had two million barrels on our reserves and we discussed with our partners and they were interested in buying us out and so felt that made a good business sense. So, that is why we exiting the asset.

Can you tell us more about the ANOH gas and what are the likely benefits for all stakeholders when it is completed next year?

ANOH is a game-changer in terms of gas business. So, by middle of next year we would be up and running. The first gas is being delayed because one of the pipelines that is expected is being delayed by supply chain issues of getting steel pipes from China. But what does that business really entail? For us, it is a 300 million standard cubic feet of (scuf) gas per day plant added to dry has processing.  The ANOH field which is one of the biggest onshore gas fields in Nigeria is a condensate-rich field. So, the liquid in the gas is very rich and has two reservoirs. One of them is particular rich in condensate. So, when we start producing, our working interest element would add almost 10,000 per day production in condensate. So, in terms of working interest, we get 50 per cent of the 300 million scuf, plus almost 10,000 a day production. That is a material game-changing for us as a business. It tends reinforces our case potential in-country and that makes us the biggest gas processor in the country, next to the government of Nigeria.  That is a very important part of our business model. So, we are very keen on that and our gas plant would be ready this year and then we wait for ANOH to come in next year.

So, how does these align with understanding how gas is at the centerpiece of energy transition in Nigeria?

It is a big part of it. We started investing in gas in 2012. When we first bought off those assets from Shell, gas had no value, it was a headache. What we found over the years was that it became commercial in-country, and I am talking about domestic gas. And we saw that as a good business opportunity. We are a big believer in domestic gas, we also believe in NLNG, but if all the gas is being exported, it would be bad for Nigeria. So, we need to develop more domestic gas. Why? That is because diesel use in-country is insane. The average amount of money an average Nigerian spends on power and electricity from diesel and petrol for generators is huge and holding back the country. It is very noisy, five times more expensive than gas and doesn’t create jobs for the country. Companies can’t afford to run on expensive diesel and petrol and trigger development. So, gas would be an enormous catalyst. We work for government and we would love it to be faster. There are some modality issues and some challenges in terms of infrastructure, but we firmly believe in it. Gas still holds a minority position until much later in the future. But that is only because of turnover and profit numbers.

What informed your decision for going for the Mobil Producing?

We look at all acquisitions objectively and look at the merits and demerits. What we like about the Mobil Producing Nigeria is that it is a business. We are not just buying an asset; we are buying a business that has assets, two terminals, infrastructure, over 1,000 Nigerian employees, it has buildings and it is a going concern. What attracted us to that business was that the employees are well-trained, they are mostly Nigerians and that brings us a lot of skills. It is shallow-water and onshore and when you look at our business model, you will see that it is a good balance for us. Yes, it is more expensive to extract, but the dying time is a lot less, the theft level is a lot less and that business has huge potential. So, beyond the normal potential, there is also a massive gas potential which we think is around 7.3 tcf as we have estimate of gas and that gas is being dried offshore and it is well primed for liquefied natural gas exports. Europe in the future is going to be buying gas from Africa, if Africa gets it right and if Africa makes investments, Europe would provide long-term off-takes. What does that do for Africa and Nigeria? That would be very good for investments in the country. We believe that Nigeria has an enormous untapped potential for gas.

To what extend will you say the delay in implementing the Petroleum Industry Act (PIA) is impacting your operations?

I don’t think it impacts us much. It has more impact on the deep water players and the international oil companies (IOCs). For us, all we want is clarity. So, new legislation comes in and if it is hanging for a long time, it creates uncertainty in the market, particularly for investors. Passing the PIA was a material thing to do, but what we are doing is looking at which assets are we going to convert to PIA and which assets how benefits are the conversion. What we are waiting on the government and regulatory bodies is that the PIA is a sort of legislation that sort of set the framework, but what the PIA doesn’t do is to give a roadmap for implementation. So, that needs to work through the system working with government. But we are excited about what the future holds with the PIA, but I think giving the clarity to us and our external investors would be a good thing.