Seplat restrategises to mitigate losses, boost cash flow
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, on Tuesday, 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.
“Currently, we have stepped in to co-finance a third party pipeline infrastructure that has been under construction for over five years, and fortunately that pipeline actually originates from where we are at Amukpe.
The pipeline will deliver crude oil to the Escravos, which is a Chevron-operated terminal.
“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.
You can see that we have actually taken steps to create not just one export route but two redundancies, just to be sure that at no time should we ever return to where we were in 2016, when we were almost down to zero production.”
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.