On Valentine’s Day last year Austin Avuru saw his company’s production stifled by 85% overnight.
The decrease had nothing to do with oil price skimming an all time low or his company’s own workings.
Instead, it was a militant group, dubbed the Niger Delta Avengers, which managed to disrupt one the country’s most important commodity pipelines.
“The evacuation of our production is a challenge, because it has been receptacle to disturbances along the pipeline, which affects our production in the Niger Delta,” he said.
“The transfer pipeline has been out of service for almost a year now and has the greatest impact on our activities.
“The government is attempting to have discussion direct with Niger Delta Avengers and reach some kind of compromise with whatever their problems are. We are hopeful we should find some peace before too long.”
The Nigerian oil and gas independent has the capacity to produce 75,000 barrels of oil per day and 300million scfd of gas per day. It’s listed in both London and Lagos.
The downed pipeline has seen its liquid production drop to just 15% of its capacity; however, its gas capacity has fared better dropping to just 75% of capacity.
“Within the majority of our area of operations, we don’t have problems with our pipelines and our facilities,” Avuru said.
“Once you get in the trunk line, the intervention has to come from government and that’s where we are almost helpless.
“We can only work with government to facilitate conversations. If it was directly within our powers, we wouldn’t be shut down for a year. We wouldn’t even be shutdown for a month.”
Seplat was formed in June 2009 through the partnership of Shebah Petroleum Development Company Limited and Platform Petroleum Joint Ventures Limited to specifically pursue upstream oil and gas opportunities in Nigeria, targeting specifically divestment opportunities arising out of the incumbent major IOC’s portfolios.
The firm is now working on de-risking its dependence on affected pipeline.
“What we’re now down is wherever we operate there will be alternative,” he said.
“There has to be alternative if one shuts down, so our business will never be affected as much as it has been now. “
The ramifications of not having an alternative span further than just Seplat’s production targets, according to the company leader.
“The oil and gas industry is the economic bedrock of Nigeria. Every success we record in the oil and gas industry is a success for the Nigerian economy,” he said.
“When we deliver 300mscfd into the domestic market most of it goes into electricity, so our gas production alone is responsible for one third of the power generation in the country. What we do has direct and immediate impact of the Nigerian economy.
“That’s why we feel sense of responsibility when we run a company like Seplat. To make sure the due governance, process and structures are such that people behind you will look up to you. You have to perform in a manner, which can be a role-modelled for those coming behind you.”
The chief executive is also eyeing growth beyond the Niger Delta.
A Lagos native, Avuru is well versed with the geo-politics that provide the sector’s backdrop.
“The Avengers and that crisis is all part of the region’s politics,” he said.
“In the southern part of the country you have people, who are asking for the lion’s share of the resource allocation.
“The northern part of the country you find disturbances, which are religious in the nature.
“These problems do not affect our industry. Any problems arising from the Niger Delta, those are the ones we worry about.”
However, he insisted it still a sound business to investing the region, which he said is rich in opportunity.
“The Niger Delta remains a very rich oil basin with relatively very low production costs if there is peace in the region,” he said.
“There is still an abundance of undiscovered oil and natural gas. In terms, of building a fairly sized E&P business, the Niger Delta still remains very attractive.
“The basin remains from a resource point of view, from a point of view of delivering success when you drill, from a point of view of unproduced, unexplored and undiscovered resources, one of the most attractive in the world.
“It will always be attractive for investors.
“These headwinds that have to do with crisis in the region are problems the government has to provide solution for. But even in spite of the problems, the region remains attractive enough for you to solve those problems rather than run away from those problems, because when you solve them the resources are available for you to extract and make money out of.”
