- Fed Govt, Seven Energy sign $112m World Bank’s gas deal
Oil rose more than one per cent yesterday, boosted by the commitment from the Organisation of the Petroleum Exporting Countries (OPEC) to stick to output cut deal.
According to Reuters news, Brent crude traded at $46.20 per barrel, up 62 cents, or 1.36 per cent, from the previous close. US West Texas Intermediate (WTI) crude was up 75 cents, or 1.7 per cent, at $44.82 a barrel.
However, prices remained more than $7 below last month’s high due to continued doubts over the feasibility of the group’s plan.
OPEC’s Secretary-General, Mohammed Barkindo, said “the group was committed to an output-cutting deal made in Algiers in September. We as OPEC, we remain committed to the Algiers accord that we put together. All OPEC 14 members, we remain committed to the implementation,” he told reporters at a conference in Abu Dhabi.
Despite this, many analysts doubt OPEC’s ability to coordinate a cut sufficient to balance the market.
In the meantime, the Federal Government and Seven Energy International Limited, an integrated gas company, have signed a $112 million Partial Risk Guarantee (PRG) for the supply of natural gas.
The gas will be delivered by its wholly owned subsidiary, Accugas to the 560 megawatts (Mw) Calabar power plant in Cross River State built under the National Integrated Power Project (NIPP).
PRG is a financial instrument that will secure the supply of up to 130 million cubic feet per day (mmcf/d) of natural gas to NIPP Calabar, thereby enabling consistent generation of an additional 560Mw of electricity to the national grid, approximately 20 per cent of current national power generation.
This arrangement, which guarantees payments to Accugas for gas supply, is backed by the Federal Government and the World Bank. It will be the first of its kind, signalling government’s commitment to increase power supply in the country and stabilise the ‘gas to power’ value chain.
Speaking on the development, in Abuja, yesterday, Vice President, Prof Yemi Osinbajo said: “I must say that this is a very significant event for us and as we all know this is the first PRG for gas that we are signing. We know that it will encourage investment in gas infrastructure and we are certainly looking forward to the multipliers that will come from it.”
Osinbajo commended Seven Energy for completing the 69 km, Uquo to Creek Town pipeline which would provide continuous flow of natural gas from the Uquo field in Akwa Ibom State to NIPP Calabar in Cross River State and add up to 560Mw to the national grid.
The construction of the pipeline involved completion of the longest river crossing horizontal directional drilling (HDD) project in Africa. The project was done by local contractors.
Prof Osinbajo said: “Given the current power situation, we expect that this gas that will go into the Calabar plant will provide another 500Mw of power, which is very significant given our current situation.”
Also speaking, the Chief Executive Officer, Seven Energy, Phillip Ihenacho said: “The signing of the agreement is very significant because it is the first gas-to-power guarantee that the World Bank has provided for encouraging investment in the gas sector in Nigeria. It assisted in securing and leveraging the $700 million investment already committed into gas infrastructure in Nigeria.