NAPENews Magazine September 2022 Edition

term must learn to listen to the little
voices from the middle management.
vi. Focusing on opportunities with attractive
upside potentials. There is room for
mistakes here because everyone is
allowed to make mistakes in our
business.
vii. Carrying out peer reviews with
c o m p e t e n t t h i r d - p a r t i e s o n
opportunities, listening to contrasting
reviews, as well as listening to the voices
from the middle management. It is very
important to carry out peer review.
Lessons Learnt
What the company has learnt in the past years:
i. Having and working with a realistic work
program, carrying JV partners along,
etc.
ii. Keeping a simple and fit for purpose
capital structure.
iii. Focusing on liquid export routes to be
clear on the difference between well
head barrels and terminal barrels. This
is very important because the company
has to concentrate on the quantity of
product at the terminal and not on the
producing capacity of the well head,
since the well head of an asset might
have 50,000 bbl/d capacity, but only
5,000bbl/d will arrive at the terminal.
iv.
With regards to an asset's future,
decarbonization should be addressed
for the company not to struggle on the
long-run. However, Seplat hasn't been
d o i n g i t s b e s t w i t h r e s p e c t t o
decarbonization, as the company has
m a i n l y b e e n f o c u s i n g o n E S G
( E n v i r o n m e n t a l , S o c i a l a n d
Governance). Gas as the energy
transition strategy in the company's
portfolio means funding is more likely to
be obtained than focusing fully on oil.
v. Being realistic with time frames to strike
deals completion with government
agencies.
vi.
Possessing a day-1 to day-100 plan and
clear KPIs (Key Performance Indicators)
for staff by having measured targets.
What Do We Need for Success?
i. Crude oil theft and downtime has made
the oil industry unworkable; we cannot
continue with theft on the pipelines that
forces companies like Seplat to shut
down or reduce production, etc.
ii. Cash call payments to be made in
advance of spending.
iii. Gas market to fully move to market
iv.
driven 'willing buyer and willing seller'.
Clear position of government on
divestment processes - follow laws and
embrace the PIA. We ask for clarity,
transparency and the clear position of
the government, as Seplat is ready to
follow the rules.
v. Having currency stability with robust
microeconomic policies, as flexibility and
liquidity of the currency will pave a way
for a lot of money to come into Nigeria.
vi.
Having more financing institutions
willing to lend to Nigerian businesses;
the equities in Nigeria are very
affordable, the African Development
Bank and Government banks should be
encouraged to lend money to long term
investors.
vii. Understanding the transition story which
deals with decarbonization alongside
social development. We cannot have the
t r a n s i t i o n f r o m h y d r o c a r b o n t o
renewable energy without passing
through social development.
The Future
Speaking on the future of International Oil
Companies (IOCs), Mr. Brown asked this begging
question, 'why is it not a time of celebration of
recycle of investment especially after spending 60
years in Nigeria and the Indigenous companies
are now working with the government?'.
The indigenous companies are natural partners
with the government and will see to the growth of
the country as they understand the sector, hence
they should be jumping at this and continually
drive investment. The indigenous companies will
not be leaving anytime soon because of their longterm
horizon, they will be here forever with their
practical approach and a measured reaction to the
micro-economic events.
Facing the reality, Nigeria contributes only 1% to
the world's daily oil production, but the potential is
vast. Hence, the sector players need to work
together for Nigeria to be bigger and to be more
relevant. So, why are we arguing about anything
when there are so many assets? Why can't we
work together and develop the resources and put
more hydrocarbon/gas in the world, monetize it
and reinvest? This is what the IPPG needs to do
as a group.
The capital will come to Nigeria and will stay in
Nigeria - this is when the investment landscape is
stable. We need transparency and we need to
follow the rules. One of the things investors find
difficult is that they struggle to see the future
because there is always some event. So, we
usually spend most of the time explaining to them
what that event is and explaining why we can go
through it. We would love not to always explain
these things to the investors if we can.
Since 2016, foreign direct investment (FDI) has
flooded Egypt, triggering significant growth, while
FDI to Nigeria plummeted.
Going Forward
The greatest business opportunity ahead is to
supply the right mix of energy to support Nigeria's
growth. In doing so, all Energy companies must
make a positive social impact and contribute to
Nigeria's achievement of the United Nation's
sustainable development goals (SDGs).
Seplat believes that oil remains crucial for
Nigeria's development and that gas will drive
energy transition and development. Seplat will
continue to invest in heavy carbon and try to
decarbonize it, making it cheaper.
Seplat and Nigeria's Energy Transition
Seplat's key priorities in addressing energy
transition is via its 3 business arms: Upstream,
Midstream Gas and New Energy.
U p s t r e a m : E f f i c i e n t l y c o s t c o n t r o l
decarbonization, conversion of dollar into more
dollar and then reinvestment. This is the cash-cow
with which Seplat hopes to fund its business going
forward, without depending on raising debt to fund
our business.
Midstream Gas: To broaden our reach within
midstream gas by accelerating the replacement of
diesel and biomass, as well as supporting reliable
low-cost energy. Key initiatives for this involve
LPG (Liquefied Petroleum Gas), CNG
(Compressed Natural Gas) for automobiles, etc.
New Energy: This involves moving into electricity.
This will be selective with less marketing. It will be
a slow upgrade from gas to power to solar. Key
initiatives include: combining solar with gas,
exploring carbon offset markets, etc.
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