…Shell, Mobil, Eni, Oando, Seplat, others take position
Local and international firms operating in Nigeria’s oil and gas exploration and production (E&P) sector have shown strong interest in the nation’s burgeoning energy sector, Business Hallmark reports.
From oil majors, Shell Petroleum Development Company of Nigeria Limited (SPDC), Eni SpA and Mobil Producing Nigeria, to indigenous oil giant, Oando PLC, oil and gas prospecting companies have steadily been investing in power assets, especially in the electricity generation subdivision, in the last ten years.
More oil firms are now showing interest in diversifying into the electricity generation sector on the back of the successes recorded by early entrants like Shell and Mobil, as well as the impressive growth and performance of two local players in the electricity generation power sub-sector, Transcorp Energy and Geregu Power.
One of the oil firms that has lately shown interest in diversifying into the power sector is Seplat Energy, with an initial plan of setting up modular gas-to-power systems to serve off-grid communities.
The company, which has doubled oil and gas production and expanded its operations from the assets purchased from ExxonMobil, aims to use the natural gas extracted from its oil fields to drive domestic power generation.
The Chief Executive Officer of Seplat Energy, Roger Brown, who made this known in a press statement made available to BH in Lagos, said the planned expansion into Nigeria’s power sector is part of its long-term strategic vision.
According to Brown, the oil company is exploring modular gas-to-power systems that can be deployed in rural areas. These systems, he explained, will play a crucial role in bridging the electricity access gap.
“At some point, when the time is right, we will take further steps into the electricity space. The company’s long-term roadmap includes expanding modular solutions that bring power closer to off-grid communities.
“We’re exploring modular gas-to-power systems that can be deployed in rural areas. These will play a key role in solving last-mile electricity access problems”, Brown emphasised.
Seplat currently supplies 30 per cent of the total gas needed by electricity generation companies (Gencos) for electricity production.
Though the Seplat Energy boss did not give full details on his firm’s future business plans, our correspondent reliably gathered that the power generated from these plants will be purchased by the Federal and state governments for onward distribution to off-grid communities.
“Negotiations are ongoing between Seplat, the National government, and some state governments from the South-South geopolitical zone to build and supply electricity to communities in the region not covered by the National grid.
“The energy produced will be paid for by the government and businesses who have undertaken to offtake the generated power.
“The success or otherwise of this pilot phase will determine whether Seplat will expand its stakes in the power sector like Oando and Transcorp”, said Julius Emiazor, an oil and gas expert based in Warri, Delta State.
BH investigation revealed that apart from plotting more incursions into the nation’s power sector, oil prospecting firms had before now invested heavily in the sector.
For instance, the 650MW gas-fired Afam VI Combined Cycle Power Plant in Afam, Oyigbo LGA of Rivers State, is fully owned by the Shell Petroleum Development Company of Nigeria.
The independent plant is a Combined Cycle Gas Turbine (CCGT) power plant that gets its gas supply from SPDC’s Okoloma Gas Plant.
Built for SPDC by Daewoo Engineering and Construction Company and commissioned in 2008, the plant’s 3 GT13E2 steam turbines with 200MW nameplate capacity each were supplied by General Electric (GE) of the USA.
In October 2017, ownership of the 540 megawatts Qua Iboe power plant was transfered to Mobil Producing Nigeria by the Qua Iboe Power Plant Limited. The agreement included the supply of gas from the NNPC/MPN joint venture offshore facilities to the power plant.
Before the change of ownership, Qua Iboe Power Plant was a joint venture between Black Rhino, a wholly owned subsidiary of Blackstone Group and the Nigerian National Petroleum Company Limited (NNPC).
Likewise, a local oil prospecting firm, Oando Energy, became one of the biggest players in the nation’s power sector in 2023 after it acquired controlling shares in Okpai 1 and 2 Power plants in Kwale, Delta State jointly owned and managed by Nigeria Agip Oil Company (NAOC), a subsidiary of Italian energy group, Eni SpA, NNPCL and ConocoPhillips.
The feat was achieved after the departing NAOC sold its onshore assets in the troubled Niger-Delta region to Oando.
However, the sale of the assets which included four onshore oil blocks (OML 60, 61, 62, 63), two onshore exploration leases (OPL 282 and 135), as well as two power plants with a capacity of 1GW to Oando was approved in 2024 by regulatory authorities.
Speaking after the government approved the sale of Eni’s onshore assets to Oando, the company’s Chief Executive Officer, Wale Tinubu, said the Okpai Independent Power Plant is more than just a project.
“It is a key asset for Oando and a strategic investment helping us shape the country’s energy landscape.
“As the most populous country in Africa with a significant power gap, creating varied energy sources is pivotal in spurring industrialization.
“We are committed to bridging the gap through investment in critical infrastructure development to support the vision of a Nigeria synonymous with uninterrupted power supply.
“With a total capacity of approximately 1GW, Okpai IPP, one of Africa’s largest combined cycle IPPs with low environmental impact and high efficiency, is one of our assets that makes this possible”, the visibly elated Tinubu had stated.
Before it’s latest expansion into the power sector, Oando had in 2010 commissioned its first Independent Power Plant (IPP), Akute Power, to supply stable electricity to the Lagos Water Corporation (LWC).
The 12.15 megawatt plant powers LWC’s main water intake facility, including two other facilities with a combined installed capacity of 125 million gallons of water per day.
The power project also included the construction of a 13km gas pipeline from Oando’s existing natural gas grid in Lagos to supply fuel to the power plant.
Checks revealed that the Nigerian power sector is currently witnessing a dynamic transformation, with operators in the electricity generation sector showing resilience and financial growth despite the volatile operating environment.
Among the notable players in the sector showing promise are Pacific Energy, Geregu Power, Transcorp Energy, and Sahara Group.
However, only the financial results of Geregu Power and Transcorp Power, which are listed on the Nigerian Stock Exchange (NGX), Geregu Power and Transcorp Energy are open to proper scrutiny.
Based on the firm’s 2023 and 2024 financial statements, they have both demonstrated promising performances and prospects of their businesses, paying out impressive dividends to shareholders year after year.
According to available data, Geregu has been consistent in paying a dividend of N8.50 per share over the last three years, with a payout ratio of about 78%, reflecting a high level of profitability.
In the same vein, Transcorp Energy’s dividend yield stands at 79.43%, 1.43% better than Geregu’s. However, Transcorp’s payout ratio is lower at N7.00 per share.
Explaining the disparity despite Transcorp’s better showings, industry experts attributed it to the Tony Elumelu-led firm’s focus on reinvestment and growth as its management seeks to strengthen it.
At the close of trading activities on the NGX on Thursday, June 5, 2025, Geregu’s share price closed at N1,141.50 with market capitalization standing at N2.85 trillion, while Transcorp Energy’s price closed at N328.50 and market capitalization of N2.46 trillion.
SOURCE: hallmarknews.com