Savannah’s assets in Nigeria include two world-scale oil and gas fields, Uquo and Stubb Creek, and the Accugas midstream business, all of which are located in South East Nigeria.
Uquo
Savannah holds an 80% economic interest in the exploration, development and production of gas within the Uquo field. The Uquo field is a non-associated gas field, with gross 2P reserves of 456.2 Bscf as at 31 December 2023, which produces gas that is processed and transported through Accugas’ infrastructure to end customers. Condensate produced from the Uquo field is exported via ExxonMobil’s Qua Iboe terminal. The remaining 20% economic interest in the Uquo field is held by Africa Investment Infrastructure Managers (“AIIM”), a leading African-focused private equity firm.
Accugas
Savannah’s Accugas midstream business focuses on the marketing, processing, distribution and sale of gas to the Nigerian market. Savannah holds an 80% interest in Accugas, with the remaining 20% held by AIIM. Accugas receives gas from Uquo at its 200 MMscfpd processing facility, where the gas is treated and then transported through its 260km pipeline network. In 2022, gas was sold to eight customers at a weighted average realised price of US$3.69/Mscf. There are three “take-or-pay” contracts where, if customers take less than the take-or-pay quantity, they are still required to pay for the minimum contractual amount of gas, equivalent to an aggregate maintenance-adjusted take-or-pay volume of 132 MMscfpd. Customers may opt to take make-up gas at a later date according to their contractual arrangements.
Savannah’s eight current gas sales agreements (“GSAs”) are
- GSA to supply Calabar Generation Company Limited, which owns and operates the Calabar power station, with 131 MMscfpd of gas for a 20 year period which ends in September 2037, with a take-or-pay commitment of 80% of the contracted volume. This GSA benefits from a World Bank supported Partial Risk Guarantee which guarantees payment to Accugas for gas invoiced. The Calabar power station has installed capacity of 560 MW;
- GSA to supply Lafarge Africa PLC, a wholly owned subsidiary of Lafarge Holcim, with 24 MMscfpd of gas to its Mfamosing cement plant in Cross River State, Nigeria, with an 80% take-or-pay commitment. This contract was revised in December 2020 with an extension for a further five years to January 2037, giving a remaining contract life of over 14 years. The Daily Contracted Quantity (“DCQ”) of gas was reduced from 39 MMscfpd to 24 MMscfpd, compensated by an advanced payment of US$20 million in December 2020 and a new pre-payment structure to 2027. The revised structure also allows Lafarge to utilise its accumulated make-up gas balance, whilst we have preserved the capacity to supply higher volumes when these are required. Lafarge’s commitments under the revised GSA continue to be guaranteed by an international investment grade(e) ban guarantee;
- GSA to supply 20 MMscfpd of gas to Ibom Power Company Limited, operator of the Ibom power station, for a ten-year period which ends in December 2023 with a take-or-pay commitment of 80% of the contracted volume. The GSA is expected to be renewed and discussions are ongoing. The Ibom power station has a current installed capacity of 191 MW and is owned by the Akwa Ibom State of Nigeria.
- GSA with FIPL to supply a maximum nominated daily quantity of 65 MMscfpd of gas to the FIPL Afam, Eleme and Trans Amadi power stations, which have a total generation capacity of 391 MW. FIPL is an affiliate company of the Sahara Group, a leading international energy and infrastructure conglomerate with operations in over 42 countries across Africa, the Middle East, Europe and Asia;
- GSA with the Central Horizon Gas Company Limited (“CHGC”) to supply up to 10 MMscfpd. CHGC is a major gas distribution company situated in the South-South region of Nigeria, operating a 17 km gas pipeline infrastructure network providing natural gas to industrial and commercial customers in the Trans Amadi Industrial Area of Port Harcourt as well as the Greater Port Harcourt Area, Nigeria;
- GSA with Notore Chemical Industries PLC (“Notore”) to supply up to 20 MMscfpd of gas to augment its current supplies. Notore is a Nigeria-based integrated agro-allied, chemicals and infrastructure company located in the Onne Oil and Gas Free Zone area of Rivers State in southern Nigeria. Notore’s primary business is the production of urea, ammonia and NPK blend fertilisers;
- GSA with Shell Petroleum Development Company of Nigeria Limited to supply up to 3 MMscfpd of gas for use in off-grid power generation at the Shell Industrial Area, Port Harcourt, Nigeria; and
- GSA with Shell Nigeria Gas Limited to supply up to 3 MMscfpd of gas supplies which commenced in August 2023. SNG is a fully owned Shell PLC company, incorporated for the downstream distribution of gas to industries in Nigeria, and currently operates a gas transmission and distribution network of over 138 km, together with several distribution systems in Nigeria.
The Accugas facilities and pipelines have significant spare capacity and are strategically located in South East Nigeria, an area where there is both substantial undeveloped gas resources (c. 10 Tscf undeveloped gas estimated to be located within tie-in radius of Accugas pipelines) and significant expected demand for gas from power stations and industrial off-takers in the Calabar, Port Harcourt, Aba and Uyo areas.
Contracted cumulative revenues (US$bn)
- Weighted average remaining contract life of 15 years, with contracted revenues extending out until 2037.
- US$3.7 billion of remaining life-of-contract revenues.
Stubb Creek
An affiliate of Savannah, Universal Energy Resources Limited, is the 51% owner and operator of the Stubb Creek Field, which is an oil field with a considerable (515.3 Bscf gross 2C) undeveloped, non-associated gas resource. Commercial production started in 2015, and 7.2 MMstb has been produced to 31 December 2023. Gross remaining 2P Reserves are 11.9 MMstb as of 31 December 2023, of which 3.8 MMstb are attributable to Savannah’s economic interest.
Oil produced at Stubb Creek is processed through production facilities which have a capacity of c. 3.0 Kbopd and is exported to the ExxonMobil Qua Iboe terminal via a 25 km pipeline.
On 19 March 2024, we announced that we had signed separate Share Purchase Agreements (“SPAs”) with Sinopec International Petroleum Exploration and Production Corporation (“SIPC”) and Jagal Ventures Limited (“Jagal”) to acquire 100% of the outstanding share capital of Sinopec International Petroleum Exploration and Production Company Nigeria Limited (“SIPEC”) (the “SIPEC Acquisition”). SIPEC’s principal asset is a 49% non-operated interest in the Stubb Creek Field. As at year end 2023, SIPEC had an estimated 8.1 MMstb of 2P oil reserves and 227 Bscf of 2C Contingent gas resources. SIPEC oil production is estimated at an average for 2024 of 1.4 Kbopd. Savannah’s Reserve and Resource base will increase by approximately 46 MMboe following completion of the SIPEC Acquisition. It is anticipated that, within 12 months following completion of the SIPEC Acquisition, Stubb Creek’s gross production should increase by approximately 2.7 Kbopd to approximately 4.7 Kbopd through implementation of a de-bottlenecking programme. The SIPEC Acquisition will also secure significant additional feedstock gas available for sale to Accugas.