Seplat to guard investments through diversification

To mitigate concentration risk in the future, Seplat has said it is prioritizing the diversification of crude export routes, hence it’s been a co-financier of a third-party operated Escravos Pipeline, which is projected to be fully commissioned and operational this third quarter, among others.

The pipeline is expected to serve as the primary evacuation route and deliver crude oil to Escravos, which is a Chevron Nigeria operated terminal on completion.

   The Managing Director, Seplat, Austin Avuru, while addressing stockbrokers during the “Facts Behind the Figures,” in Lagos, explained that the project would enable the company de-risk future cash flows, provide export option for oil volumes, and increase shareholder’s value.

“Our biggest risk to our key business is evacuation. We have taken off the pipeline we have built in 2014 to the Warri Refinery, to finance and put in additional capital infrastructure in the Refinery that would enable us as a last resort to badge our production out of the Refinery.

“Our primary export facility remains the Trans Forcados, but because we cannot have 100 per cent faith on Trans Forcados, we have built an option of Warri Refinery as a last resort.

“It is under construction and once that is completed, and commissioned, it will become our primary evacuation route and Trans Focados will be our secondary evacuation route, and the Warri Refinery becomes the last option,” he said.

Avuru, while fielding questions from stockbrokers, however said Seplat is not ready to invest in refinery business in the nearest future, as it is not its core business, noting that its core business is to develop natural gas.

“Establishing a refinery is not our core business; our core business is to find already developed and produced natural gas and crude oil. In this case, our key focus is natural gas, to deliver it to the market because we are operating in the local market.

Giving a financial update of the company, Roger Brown, Chief Financial Officer of Seplat said the company had been able to protect the core business of the company in difficult conditions and has returned to profitability thus reinstating dividend payment at earliest opportunity.

Looking forward, Brown said the company would leverage it’s position and track record to access new production and development assets in the Niger Delta and position it as the leading indigenous independent E&P.