ANOH Gas Processing Plant

The ANOH Gas Processing Plant development at OML 53 (and adjacent OML 21 with which the upstream project is unitised) will drive the next phase of growth for Seplat Energy’s expanding gas business.

The project will comprise a Phase One 300MMscfd midstream gas processing plant. The ANOH plant, is being built by AGPC, which is an IJV owned equally between Seplat Energy and the Nigerian Gas Company (NGC), a wholly owned subsidiary of Nigerian National Petroleum Corporation (NNPC). In February 2021, The IJV, AGPC, successfully raised $260 million in debt to fund completion of the ANOH project. The project is now fully funded following completion of equity investments of $210 million by each partner ($420 million combined).

ANOH is one of Nigeria’s most strategic gas projects. It will help Nigeria to accelerate its transition away from small-scale diesel generators to cleaner, less expensive fuels such as natural gas for power generation. The upstream development, including the drilling of six production wells, will be delivered by the upstream unit operator SPDC, with four wells expected to be completed in 2021. We have made good progress on the project despite the Covid-19 challenges, and expect to achieve mechanical completion by the end of 2022. However, after third-party pipeline projects, we now expect to achieve first gas by the end of H1 2023.

The initial total project cost was budgeted at $700 million. Following a cost optimisation programme, the AGPC construction cost is now expected to be no more than $650 million, inclusive of financing costs and taxes, significantly lower than the original projected cost at FID.

The ANOH gas plant achieved mechanical completion on 29th December 2023 without recording any Lost Time Incident (LTI) across 11 million hours. Current activity on the ANOH gas project involves moving all key work streams to completion ahead of first gas, planned for 3Q 2024.
All upstream wells required for first gas were completed by the operator, SPDC, in 2023, with well deliverability tests conducted in Q1 2024. Work is ongoing to connect the wells to the gas plant.
Our government partner, NGIC, is responsible for delivering the pipelines required to transport the gas from ANOH to the demand centres, including the 23km spur line and the Obiafu-Obrikom-Oben (OB3) pipeline.
With respect to the OB3 pipeline, grouting of the unconsolidated formation along the tunnelling pathway on the River Niger has been completed, and our government partners announced that tunnelling operations are ongoing. Our partners recently reaffirmed their guidance for completion of construction of the OB3 pipeline in 1Q 2024.

Regarding the Spur Line project, the operations in Imo State are witnessing improved progress following the engagement of additional contractors to expedite the completion of the remaining pipeline sections. NGIC is advising an expected completion date of the end of Q1 2024.
The project has achieved several notable milestones in recent months, providing greater assurance that the project is on track to achieve first gas as estimated by Seplat in Q3 2024.

Upon commencement of operations, ANOH will provide two income streams to Seplat. First, the sales of wet gas from Upstream to AGPC. The ANOH gas plant has a design capacity of 300 mmscf/d. Seplat will report our net share (40% working interest) of wet gas production as working interest production. We note that gas
sales will benefit from lower opex than our current gas operations by virtue of not having to bear the burden of midstream processing costs.
Second, as a 50% owner in the AGPC incorporated joint venture, Seplat will receive dividends from the AGPC's profits.
As previously reported, we anticipate c.6-month ramp up to plateau production after first gas, during which period AGPC will establish plant stability and offtake performance. Incorporating these elements, we estimate that AGPC should provide a dividend stream net to Seplat of c.$30m per annum. The dividends are expected to begin approximately 12-18 months after first gas. We expect that a $10/bbl change in the oil price would change the expected dividend by c.$5m, while a 1% change in production deferment changes the expected dividend by c.$1m; both figures are net to Seplat