Months after acquiring a Nigerian oil and gas exploration, British firm, Savannah Petroleum Plc has disclosed its intention to acquire more Nigerian companies in the coming years to expand its footprint in Nigeria and Africa.
Andrew Knott, the Chief Executive of Savannah Petroleum said the acquisition of Seven Energy International Limited is just a tip of the plans the British firm has for the Nigerian business environment. He was reported to have stated that Savannah Petroleum was still eyeing some assets.
Going after ‘not so attractive firms’: Savannah Petroleum plans to go for assets that other companies do not see much value in. “We will look at things opportunistically,” Knott said, adding that, “Seven Energy should be viewed as a starting kit.”
It has already been widely reported that international oil companies like Chevron and ExxonMobil are looking to sell off their Nigerian stakes to focus on projects at other markets, and the possibility of Savannah Petroleum tapping into the assets has not been written off.
Savannah Petroleum plan for Nigeria: Speaking on the company’s operational plan for the Nigerian market, Knott said expanding its base of Nigerian industrial customers, including factories and power plants was on Savannah Petroleum’s radar. This is because only about 50% of the capacity of gas infrastructure purchase is being used in the country.
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Knott, who made this known on the sidelines of the Africa Investment Summit in London, said already, 10% of Nigeria’s power is provided by Savannah Petroleum. In differentiating the company’s gas supply, Knott said the supply of gas to power stations and industrial customers is cheaper than the use of diesel, which is roughly $15, while gas usage is about $3.50 per thousand cubic feet.
But despite the drive for the usage of gas to power stations and industrial customers in Nigeria, Savannah Petroleum also has oil assets in Niger, another West African country. There, Savannah Petroleum controls about 50% of the oil-prolific Agadem Rift Basin. Speaking on both portfolios in Nigeria and Niger, Knott said both assets provide growth opportunities. “Both base businesses have very good organic growth opportunities.”
Why this matters? Nigeria has been having power or electricity problem for decades now despite being the largest economy in Nigeria. The power supply issue had led to the privatisation of the power sector in 2013 and the supply of the electricity was divided into several categories: six generation companies; 12 distribution companies covering all 36 Nigerian states, and a national power transmission company.
Despite the privatisation, the power outages still remain, with government and the private electricity company trading blame on the reason for the deplorable power supply. The struggle to have stable power supply has led to the rise of energy companies, both gas and solar operators proffering their products and service as the solution.