16 February 2015, Lagos – Seplat Petroleum Development Co., a Nigerian oil producer that bought assets from Chevron Corp., plans to defer some oil investments while expanding gas output to survive low crude prices, company Chairman Ambroise Orjiako said.
“We’re looking very strongly to compensate for the revenue drop by increasing gas production,” Orjiako said in an interview with Bloomberg TV Africa broadcast Thursday.
There will also be “a lot of tightening” with the company deferring “non-essential” capital projects, he said.
Seplat currently pumps about 70,000 barrels a day and is on course to meet its target of 85,000 barrels a day by next year.
Small Nigerian oil companies pumping less than 100,000 barrels per day, have seen their revenue eroded by the more than 50 percent drop in crude prices since they peaked in June last year, analysts including Pabina Yinkere of Vetiva Capital Management Ltd said.
They’re further squeezed by higher production costs of about $30 for a barrel, compared with $15 a barrel for bigger oil companies such as Royal Dutch Shell Plc and ExxonMobil Corp.
Seplat expects to double its gas-processing capacity to 280 million cubic feet per day by the end of first quarter when it completes expansion projects, Orjiako said. This would enable the company take advantage of higher domestic gas prices of $2.50 per thousand cubic feet approved last year by the government.