A Review of the Nigerian Energy Industry

IFC, Temasek invest $255m in Seven Energy

SEVEN ENERGY…Firm to use funds to develop gas opportunities

Yemie Adeoye 16 April 2014, Sweetcrude, Lagos – Seven Energy International Limited, an indigenous integrated oil and gas development, production and gas distribution company in Nigeria, has announce that it has secured US$255 million new equity capital to enable it further develop gas supply opportunities in Nigeria’s domestic energy market.

The equity capital is coming from three sources – Temasek, the Singapore investment company, has committed US$150 million, the International Finance Corporation, IFC, a member of the World Bank Group, US$75 million, and the IFC African, Latin American, and Caribbean Fund, IFC ALAC Fund, US$30 million. 

The investments would be in two tranches and the timing would be subject to the satisfaction of certain conditions in the investment agreements, Seven Energy said.  

The institutions are investing in Seven Energy’s irredeemable convertible loan notes which bear no coupon and are akin to equity capital.  On a converted and fully diluted basis, on full satisfaction of the investment agreements, the new investors would account for approximately 26% of the equity capital of the group.

“This new equity capital will assist Seven Energy in the development of its growing portfolio of assets in Nigeria, where the Group is focusing on the development of upstream reserves and resources and gas infrastructure to provide gas to the domestic market for power generation and industrial consumption. 

“Through its gas processing, distribution and marketing subsidiary, Accugas Limited (Accugas), and its recent acquisition of the East Horizon pipeline, the group has to date invested approximately US$1 billion in south-eastern Nigeria.  This reinforces the Group’s position as a leading integrated gas company in Nigeria. 

“The group aims to capture the growing demand for gas and power as Nigeria’s industrial base grows and the liberalisation of the power sector spurs further investment in generating capacity,” the company said.

Seven Energy has a long-term take-or-pay gas sales agreements in place to sell over 1.4 trillion cubic feet of gas.  A 10 year contract to supply 43.5 million cubic feet of gas per day (MMcfpd) to Ibom Power; a 20 year contract to supply 131 MMcfpd to the federally-owned power plant at Calabar; and a 20 year contract to supply 25 MMcfpd to a cement plant in the Calabar area, increasing to 50 MMcfpd upon the anticipated expansion of the plant. 

The two power stations, which will have a combined installed capacity of approximately 750 MW when fully commissioned, will add an additional 20% of capacity to Nigeria’s current operating electricity generation capacity.

In collaboration with its customers and other stakeholders, Seven Energy is working to link its infrastructure together to establish a 300 km gas ring of 24-inch and 18-inch high pressure pipelines in Akwa Ibom and Cross Rivers states with total distribution capacity of 600 MMcfpd, capable of supplying the demand centres of Calabar, Uyo and Ikot Abasi, and giving access to Port Harcourt to the west.

In addition, at Ekid, near the ExxonMobil Qua Ibo terminal, the Group owns a gas plant for treating and processing 200 MMcfpd of gas which is currently supplied from the Uquo Field where the Group is the 100% funding partner.

With this significant capacity built into its processing and distribution infrastructure, the group is well-positioned to provide long-term gas supply for power generation as well as lower-cost fuel to local industries.  The group is currently in active discussions with a number of current, planned and potential off-takers with regards to future gas supply agreements.

Seven Energy’s Chief Executive Officer, Phillip Ihenacho, said of the equity investment: “Seven Energy has developed a strong and strategically important position in the rapidly developing gas market in Nigeria.  I am very pleased that the Group has gained the support of Temasek, IFC and the IFC ALAC Fund, all highly-respected global investors. 

“These investments are a vote of confidence in Nigeria and in Seven Energy’s vision to be the leading supplier of gas in the country.”

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