Seven Energy to boost operations with $200mn investment guarantee

03 Nov 2015
Financial Nigeria


The investment is expected to have significant development impact on Nigeria’s emerging power sector.

Phillip Ihenacho, Chief Executive Officer of Seven Energy

The World Bank’s Multilateral Investment Guarantee Agency (MIGA) is providing a $200 million political risk insurance or investment guarantee to Seven Energy International Limited, Nigeria’s independent integrated oil and gas company. The investment is expected to have significant development impact on Nigeria’s emerging power sector. Nigeria’s inadequate gas infrastructure is part of the reason for insufficient power supply in the country. Seven Energy’s investments are helping to deliver gas to three power stations and two manufacturing plants to boost the domestic market.  

The deal with MIGA, the World Bank agency which provides political risk insurance and credit enhancement to investors and lenders, was announced last week. It would guarantee against the risk of expropriation to Seven Energy’s wholly-owned subsidiary, Accugas Ltd. The investment is said to have a strong environmental profile, as Seven Energy’s operations will reduce gas flaring and displace more-polluting fuels such as diesel and biomass.

For most international oil and gas companies operating in Nigeria, gas is often considered a by-product. It is either, re-injected, liquified for export, or often flared. Nigeria has enormous natural gas reserves, yet about 55 percent of the population has no energy access. The Nigerian government created the Gas Master Plan in 2009 to increase the gas supply and jumpstart investments in gas infrastructure through market-based pricing, strengthened regulation, increased contract enforceability, and better-aligned incentives.

Phillip Ihenacho, Chief Executive Officer of Seven Energy, said, "MIGA’s involvement is an important part of the financial security package that enables us to invest for the long term in Nigeria’s gas sector—a decision that we expect will be good not only for our business, but also for Nigerian citizens, companies, and the economy as a whole.”

This deal is MIGA’s first involvement in Nigeria’s gas sector. MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment into emerging economies to support economic growth, reduce poverty, and improve people’s lives. The deal is also the latest in a series of deals between MIGA and energy sector companies to assist in the joint-development of environmental solutions in line with the World Bank's new environmental ideals. In addition to the deal, the World Bank will support Seven Energy's business activities with an IFC-managed fund invested in Seven Energy's Nigerian operations.

Seven Energy operates in the upstream and midstream sub-sector of the oil and gas industry. According to the company, its upstream assets include licence interests in the Uquo Field and the Stubb Creek Field (south-east Niger Delta), an indirect interest in OMLs 4, 38 & 41 through a Strategic Alliance Agreement with Nigerian Petroleum Development Company (north-west Niger Delta) and a licence interest in OPL 905 (Anambra Basin).

Its midstream infrastructure assets, focused on south-east Niger Delta, include the 200 MMcfpd Uquo Gas Processing Facility and a gas pipeline network of 260 km with distribution capacity of 600 MMcfpd.

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