The Chairman of Seplat Petroleum Development Company Plc, Dr. ABC Orjiako, Thursday assured shareholders that the company has put in place strategies that would improve its financial performance and deliver better value going forward.
Several economic headwinds and the shut-in of the Forcados terminal resulting in lower production, lower oil price realisations and higher costs, made Seplat’s revenue to fall from N113 billion in 2015 to N63.7 billion in 2016, while a loss of N45.4 billion was recorded compared with a profit of N13 billion in 2015.
However, speaking at the annual general meeting of the company held in Lagos, Orjiako said with the diversity of export solutions in place and “our increasing gas processing capacity, Seplat has the potential to deliver material production upside with less risk of significant constraints from any infrastructure disruption”.
According to him, the company is actively pursuing alternative crude oil evacuation options for production at OMLs 4, 38 and 41 and potential strategies to further grow and diversify production in order to reduce over-reliance on one particular third party operated export system in the future.
“In line with this objective, Seplat successfully implemented, in 2016, an alternative export solution during the second quarter whereby crude oil production from OMLs 4, 38 and 41 is sent via the company’s own 100,000 barrel of oil per day (bopd) capacity pipeline to available storage tanks at the Warri refinery,” he said.
Explaining the challenges faced by the company in 2016, Chief Executive Officer of Seplat Austin Avuru said: “In addition to a difficult global oil market backdrop, our business had to contend with unprecedented operational challenges due to interruptions and these are reflected in our full year results.”
He disclosed that the company has now established a longer-term alternative export route via the Warri refinery jetty and is nearing completion of upgrade works to the infrastructure enabling a doubling of barging volumes to a steady 30,000 bopd gross during Q2 2017.
According to him, alongside this, the company is collaborating and supporting government on the completion of the Amukpe to Escravos pipeline that will offer a third export route through the Escravos terminal.