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Also the naira has the chance of strengthening as Dangote refinery starts regulator mandates supply to refinery
https://www.arise.tv/in-compliance-with-petroleum-act-nigerian-regulator-mandates-oil-companies-to-supply-483000-bpd-of-crude-oil-to-local-refineries/
The start up of the Dangote refinery in Nigeria could potentially have a few impacts on the USD to Naira exchange rate:
Reduced demand for foreign currency: Nigeria currently imports the majority of its refined fuel products. The Dangote refinery with a capacity of 650,000 barrels per day could eliminate the need to import a significant amount of refined fuel, reducing demand for foreign currency like the US Dollar. This could strengthen the Naira.
Increased FX inflows: The refinery could also increase foreign capital inflows into Nigeria as foreign investors seek to invest in supporting industries and services around the refinery. More dollar inflows could lead to Naira appreciation.
Revenue source for government: The refinery is expected to generate significant tax revenue for the government. This additional Naira revenue source could support the central bank's efforts to defend and stabilize the currency.
I wonder if Savannah have considered using port in Lome Togo to get equipment into Niger, as that corridor is open into Niger. Looks like Benin backtracking seems like they don't want to lose future port revenues to Togo. Savannah should exercise all available options to get equipment into Niger to commence work
https://nouvelledafrique.tg/niger-levee-de-sanction-par-le-benin-niamey-privilegie-les-corridors-du-togo/#google_vignette
Following the considerable decline in the Beninese economy due to the country's sanction following last July's coup d'état in Niger, the Beninese state lifted the sanctions this week, but the Niger Chamber of Commerce is asking operators economical to continue using the corridors of Togo.
The Niger Chamber of Commerce and Industry, in a press release published on December 28, 2023, invites economic operators to continue to use Togo's ports and corridors to transport goods.
Here is the press release
“By Notice No. 2325/23/PAC/DOPS/DI/DAF/DAJC/DCM/SC of December 27, 2023, the Autonomous Port of Cotonou informs the public of the lifting of the measure relating to the suspension at the Port of Cotonou , imports of goods to Niger.
However, the Niger Chamber of Commerce and Industry reminds economic operators that illegal, unjust and unfair ECOWAS sanctions remain, in particular those relating to the closure of borders, with the aim of blocking commercial transactions with our country.
To do this, the Niger Chamber of Commerce and Industry invites economic operators to continue to use the ports and corridors which have served our country since the events of July 26, 2023.” indicates the press release
Streetsofgold - I would still imagine that we can have incremental gas deals ahead of the CPF completion mid next year. However post CPF accugas business can easily x2 or x3 easily. So the period once the CPF is complete would be most interesting. I also posted that we have started some work with Ibom power company, to improve efficiency of the plant. If we have more gas available than we need more buyers / customers to be able to successfully take up gas . So I believe all areas of the supply chain would be worked on in the background to make the cluster development of 5tcf of gas in OML 13 feasible using the accugas pipeline once the CPF facility is complete.
You mentioned a guesstimate it’s hard to put a guesstimate as everyone knows but I would like to see our production from accugas alone to be in the 50,000. - 60,000 Boepd by the end of 2024 especially post CPF. Again this is me just making assumption so let’s see but all the potential is there and ready it’s about how savannah are able to convert aggressively. The pipeline is there, the gas is there, the cpf once complete will enable us to transport more treated gas but there is nothing stopping us from transporting untreated gas at the moment.
I am feeling more optimism with the accugas business for the next 6, 12, 18 months and beyond and if they are able to also convert the accugas debt into long tenure than the cumulative effective will be massive stretched debt payments over 10 / 15 years and substantial increase in gas revenues will have double the effect on the accugas business.
OML 13 development is a key NNPC's Seven Critical Gas Development Projects and thus will affect is and massively underpin the accugas business and provide for material growth.
Cluster development of OML 13 to support the
expansion of Accugas Uquo Gas Plant
400 mmscfd expected volume or circa 70,000 boepd
Cluster gas development of OML 13 with 2Preserves of ~5Tcf
Expansion of the existing Accugas Uquo Gas Plant
Development of the Trans-Nigeria Gas Pipeline to transport the processed gas further to the domestic market from Ukanafun
A detailed report - https://www.ashurst.com/en/insights/nigerias-energy-transition/
Looking at the list of 7 gas projects our project is most likely to be monetised quickly with existing pipeline in place but also the Uquo gas compression project already under way and we all know our pipeline has a capacity of 600 mmscfd with accugas probably only utilising 200 mmscfd fits perfectly with that 400 mmscfd expected volume.
Some additional info on OML 13
https://www.offshore-technology.com/data-insights/oil-gas-field-profile-oml-13-conventional-gas-field-nigeria/?cf-view
https://www.woodmac.com/reports/upstream-oil-and-gas-oml-13-67681449/
With our pipeline being the only gas pipeline that runs through the OML 13 licence I am sure we can be big winners of the planned oil and gas development . In this licence area
https://www.thisdaylive.com/index.php/2023/04/10/with-89-expected-assets-nigeria-to-top-africas-upcoming-oil-gas-projects-by-2027
https://saharareporters.com/2019/07/24/nnpc-signs-315bn-deal-financing-oml-13
https://energycapitalpower.com/top-upstream-oil-gas-projects-nigeria-23-27/
“Nigerian National Petroleum Company Limited (NNPC) through its upstream subsidiary and Natural Oilfield Services Limited (NOSL), an indigenous operator, are jointly handling exploration work on OML 13.It’s a large block in Akwa Ibom State, Nigeria’s oil rich Niger Delta and is reported to hold in place volumes of over 900 million barrels of oil and 5 trillion cubic (tcf) of gas.Nigeria has also recently concluded the bidding and award process for about 57 marginal fields which, other things being equal, would likely begin to produce first oil from the end of 2023”
Savannah has previously said there is 10 tcf plus gas in OML 13 licence which is basically our pipeline network runs through.
The CPF completion is perfectly timed in my opinion and I can see us fully capitalising on the developments happening in OML 13. Plenty of Amocon style deals are likely to be done. They did say Amocon deal will serve as a template.
Probably makes sense that they might want to keep some spare capacity available in readiness for when OML 13 production kicks off..
Our pipeline in someway was probably the smartest move AK made when going for accugas asset. Having the right geographically placed midstream asset can be invaluable as demonstrated by the accugas pipeline.
I believe when we went for Exxon chad DOBA asset it was the same thinking to have the Cotco pipeline as midstream assets in and around oil and gas fields can prove to be invaluable every producer has to use them if there are no alternative export routes.
If oil and gas fields come online in OML 13 then we will be massive winners of this. Which is why I believe Savannah energy has continued to hire in regions like uyo and eket as they might be ready to exploit the potential development that is to come from OML 13 lease
Longshort - with or without South Sudan deal I would expect a comprehensive operational update on Nigeria and Niger and also the forward strategy considering we have had nothing of that sort for over a year now.
Hope everyone had an amazing Christmas break
Looks like Benin has opened it's borders for goods import into Niger, time for savannah energy to now be aggressive and start importing goods into Niger to get things in motion for well test.
My guess is this move is driven by both the countries alongside CNPC to get the pipeline exporting crude in the new year and that probably requires goods and material for oil fields operation
https://www.africanews.com/2023/12/28/benin-removes-suspension-of-transiting-goods-to-niger//
With import of goods opening from benin port and starting of export pipeline let's hope savannah can now take Niger a lot more seriously and start to be aggressive.
I am quietly feeling optimistic about Niger now and it's slowly starting to come back into play.
Brilliant RNS from Harbour Energy yesterday also Afentra doing well and securing 2/3 approvals for their deals. Goes to show if done right there are always other deals out there.
I wish Savannah would pivot away from project that matter strategy in africa and look at other regions. It would be easier to finance those acquisitions and easier on the approvals front.
I must say I am slightly jealous to say the least that others are managing to do deals and we don't yet know what's happening with ours. Here is hoping to Savannah bringing south sudan or another deal successfully to the market via an admission document, no matter how big or small the deal is.
Angola has decided to leave Opec with Quota disputes, could this be a new trend amongst top african producing nations as they try to maximise there hydrocarbons, wouldn't surprise me if Nigeria is to also go down this path soon, other may follow.
https://www.reuters.com/business/energy/angolan-president-approves-opec-withdrawal-statement-2023-12-21/
African countries in summary are done playing with the west and now we will see many try to put their interest ahead of west. It would be interesting to see how Saudi and Russia respond to this. Are the wheels finally coming of the opec cartel. Don't think there will be any winners out of this if the market is flooded with supply than. All 3 top producers will suffer:
1) US will suffer as shale has a high price of breakeven.
2) Russia and Saudi budget is heavily reliant on oil price at certain level.
Fully concur we should really aim to to get accugas producing 50,000 Boepd at stable consisent rates and pay down as a much debt as possible, whilst re-financing. Work up a solid plan for Niger and be aggressive once export pipeline commences. These acquisitions are only good when they come of successfully but most governments in Africa will either nationalise or majors will sell to local players so the I believe the perceived opportunity from African investment is no longer exists would love to be proven wrong but that is just my view
Doing some further research I believe our partnership with AKWA IBOM Power company will turn into a material event. Here are a few articles why :
New oil refinery coming online in AKWA ibom for 200,000 bopd next year will probably need stable power and will be souced from IBOM power station
https://www.legit.ng/business-economy/energy/1568228-after-dangote-refinery-project-begins-consignment-arrives-china/
The plant produces current installed capacity of 191 MW and is owned by the Akwa Ibom State of Nigeria. But can produce up to 732 MW. The new deal shows that the aggregate maximum capacity of the gas turbine generator unit was capable of producing up to 732 megawatts.
https://www.vanguardngr.com/2022/05/akwa-ibom-firm-seal-deal-for-732mw-ibom-power-plant-expansion/
New substation investment in region to transfer power from plant to national grid -
https://guardian.ng/news/fg-kick-starts-construction-of-n6-8bn-substation-in-a-ibom/
Power distribution licence approved to local neighbouring states from ibom power
https://businessday.ng/news/article/nerc-approves-electricity-distribution-company-for-akwa-ibom/
Akwa Ibom gives Fed Govt nod to offtake power from Ibom Power Plant
https://thenationonlineng.net/akwa-ibom-gives-fed-govt-nod-to-offtake-power-from-ibom-power-plant/#google_vignette
Seems like there is material potential in our partnership with Ibom Power company
There seems to be plenty of optimism in the Nigeria Gas sector and some recent comments from NNPC and total energy committing $6bn
https://championnews.com.ng/well-use-gas-to-revolutionise-nigerias-power-industrial-sectors-kyari/
https://www.ogv.energy/news-item/total-energies-plans-6bn-investment-in-nigerian-oil-and-gas-assets
I can see plenty of opportunity to have Amocon style agreements to use third party gas through our network. The beauty of our pipeline is that we have 10 TCF of undeveloped gas resource in and around our pipeline.
"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."
Rocky - the company and IR could be doing a lot more in keeping the shareholders appraised no matter how big or small the operational updates are and regardless of whether we are in a suspension period or not, there isn’t really any excuses there
Lets help ibom power with efficiency and optimal performance hopeful leading to a higher uptake in gas from us.
https://www.linkedin.com/feed/update/urn:li:activity:7142930068057595904?updateEntityUrn=urn%3Ali%3Afs_feedUpdate%3A%28V2%2Curn%3Ali%3Aactivity%3A7142930068057595904%29
Seems like we will have a greater influence in the running and making Ibom power plant efficient. Let's hope we can increase our take / pay gas from 20 MMscfd which is due to expire this month.
https://www.linkedin.com/posts/kuthompson_kuthompson-ariseagenda-umoeno-activity-7142765274172231680-_MMB?utm_source=share&utm_medium=member_desktop
On a separate note looks like the CPF construction is running at full steam ahead we have hired a new construction co-ordinator
https://www.linkedin.com/posts/adebanjoadebowale_im-happy-to-share-that-im-starting-a-new-activity-7142414769243820033-Bflu?utm_source=share&utm_medium=member_desktop
One thing that does intrigue me and can work in our favour is if we help power stations become more efficient like the Ibom power limited company link I posted below.
Seems to me that we are acting like techincal partners helping the power station become efficient and de-bottling the station to be able to handle stable transmission as part of this I am sure we can sell more gas to the Ibom power limited. It seems like we can act as technical partners and advisors for our customers and in return for more gas uptake, sounds like a win win model. We get more stable gas sales and potential increase in volumes.
Wouldn’t surprise me if we are doing that with a lot of our power station customers or plan to adopt this strategy.
Longshort - agreed it is frustrating to be suspended. But even without another acquisition there is a credible path to circa 50,000 boepd based on accugas alone in the next 6 -12 months if they pick up a few more gas contracts which I am sure they must be keen to get a few more.
Accugas has and is the crown Jewel of our portfolio and its organic growth and projected growth more than underpins the company regardless of acquisition outcomes and Nigeria being probably the most stable country to own an oil and gas asset.
Hence I was and still i am a bit surprised that they haven’t been able to secure another asset in country yet or perhaps they might in the not distant future.
Nigeria has signficant number of development assets which are capital starved. I am sure they are quite a few that could give 5 - 10 k Bopd per asset they should be more aggressive with these too and not just assets that majors are selling.
Yes granted we all want the big deals as that is overnight transformation and all I want for Christmas is deals for savannah whether SS or another.
If raising debt for SS is proving to be difficult and there are other assets going in relatively attractive jurisdictions we should go for those considering our ability to finance deals is hedge on the jurisdiction as we always opt for ring fenced financing perhaps it’s time we went to our lenders with an alternative deal which isn’t SS.
Based on the below growth rate of new gas contracts in motion and potential more gas contracts with hopeful debt restructure will have a material impact on the accugas business significant increase in revenues with debt restructure to match contract life can easily shift the Risked NAV estimate well beyond 45p/share.