Savannah’s assets in Nigeria include two large-scale oil and gas fields, Uquo and Stubb Creek, and the Accugas midstream business, all of which are located in South East Nigeria.
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 (NAG) field, with gross reserves of 496 Bscf, which has been in production since Q4 2013. The gas is processed and transported through Accugas’ infrastructure to end customers. Condensate produced from the Uquo field is exported to ExxonMobil’s Qua Iboe terminal (QIT). The remaining 20% economic interest in the Uquo Field is held by African Infrastructure Investment Managers (“AIIM”), a leading Africa-focused private equity firm.
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 delivered to customers through its 260km pipeline network. Gas is currently sold to three main customers under long-term gas sales agreements (“GSAs”) at a weighted average gas price of US$3.9/Mscf for 2020 which is expected to increase by an average of 6% per annum over the next six years. The GSAs are all “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 140 MMscfpd in aggregate before taking into account an allowable downtime for maintenance).
The Gas Sales Agreements with the three customers are
- a GSA to supply 131 MMscfpd of gas to the 560MW capacity Calabar Power Station operated by Calabar Generation Company Ltd, a subsidiary of Niger Delta Holding Power Company (NDPHC). The 20-year contract with an 80% take-or-pay commitment, ends in September 2037. This GSA benefits from a US$112 million Partial Risk Guarantee from the World Bank for payments due to Accugas under the GSA.
- a GSA to supply 24.2 MMscfpd of gas to the 5 million tonnes capacity Mfamosing cement manufacturing plant owned by Lafarge Holcim’s subsidiary, Lafarge Africa PLC (“Lafarge”), in Cross River State, Nigeria. The 25-year contract, with an 80% take-or-pay commitment, ends in January 2037. Lafarge’s commitments under the GSA are secured by bank guarantee issued by Standard Chartered Bank Nigeria.
- a GSA to supply 20 MMscfpd of gas to the 190MW capacity Ibom Power Station, owned and guaranteed by the Akwa Ibom State Government. The 10-year contract with an 80% take-or-pay commitment ends in 2023.
The Accugas facilities and pipelines have significant spare capacity and are strategically located in South East Nigeria, an area with substantial undeveloped gas resources (c. 10 Tscf undeveloped gas estimated to be located within tie-in radius of Accugas pipelines), and significant expected demand for gas from power stations and industrial offtakers in the Calabar, Port Harcourt, Aba and Uyo areas.
Contracted cumulative revenues (US$bn)
- Total contracted revenues stream of US$4.3bn, on a maintenance adjusted Take-or-Pay basis
- Weighted average remaining contract life of 17 years, with contracted revenues extending out until 2037
- 99% of future contracted revenues are with customers providing investment grade credit guarantees1
1. Savannah entered into exclusive discussions to acquire the Nigerian assets in 2017
Savannah holds a 51% operating interest in the Stubb Creek Field with the remaining 49% interest held by Sinopec. Stubb Creek is an oil field with a considerable (515 Bscf gross 2C) undeveloped, non-associated gas resource. Commercial production started in 2015, and 4.7 MMstb have been produced to date (to 31 December 2020). Gross remaining 2P reserves are 14.4 MMstb, of which 3.5 MMstb are attributable to Savannah’s interest.
Oil produced at Stubb Creek is processed through production facilities which have a capacity of c. 3.0 Kbopd and is exported to the ExxonMobil’s Qua Iboe terminal via a 25km pipeline, while associated gas is routed to the Uquo Central Processing Facilities via a 31km pipeline.
Strongly positioned to deliver future growth
Average daily gross production (Kboepd)
Cash collections (US$m)
Savannah’s forward growth plans are focused on the addition of new customers, both power stations and new lower-volume, high-value industrial customers whose typical alternative source of power is from higher-cost diesel-fuelled generation.
In January 2020, Savannah signed a new GSA with First Independent Power Limited (“FIPL”) in relation to the provision of gas to the FIPL power station located in Afam, Rivers State. 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. FIPL Afam has a current power generation capacity of 180MW.
The FIPL GSA envisages the supply of gas (produced from Uquo, with a maximum daily nominated quantity of 35 MMscfpd or approximately 5.8 Kboepd) from Accugas to FIPL, to augment its existing gas supply on an interruptible basis for an initial term of one year with the option to extend by mutual agreement. Savannah is in the process of working with FIPL to validate the third-party infrastructure required to enable the commencement of gas sales under this contract.
In February 2021, Savannah’s Accugas subsidiary signed its first Gas-to-Compresssed Natural Gas (“CNG”) sales agreement with Mulak Energy, part of the Egyptian multinational Mansour Group, with operations in more than 100 countries. The GSA is initially for a seven-year term and envisages the supply of gas produced by Savannah’s majority-owned Uquo field for an initial two-year period on an interruptible basis (the “Interruptible Gas Delivery Period”) and the subsequent five years on a firm contract basis (the “Firm Delivery Period”). During the Interruptible Gas Delivery Period, Mulak is able to nominate a maximum daily quantity of up to 2.5 MMscfpd. Volumes in the Firm Delivery Period will be agreed by the parties before the end of the Interruptible Gas Delivery Period. Sales under the GSA benefit from a bank guarantee arrangement from an investment grade credit rated international bank.
Mulak initially plans to distribute CNG to its industrial customers in Rivers State with the CNG to be substituted for diesel in generators supplied by the Mantrac Group, also a member of the Mansour Group and one of the world’s largest dealers in Caterpillar machinery, power systems and equipment. Mulak is in a unique position to exploit the synergies with Mantrac’s business in Nigeria through the conversion of Mantrac’s existing customer base of approximately 400MW of diesel fuelled generators to CNG-fuelled generators. This is expected to provide Mantrac customers with up to a 40% saving in energy costs and a 30% reduction in their carbon footprint. Sales under the GSA are expected to commence in 2022 and, following the initial two-year period, Mulak has indicated that it is seeking to expand its CNG sales on a pan-Nigeria basis to Mantrac customers.