Seplat Petroleum signs crude purchase agreement with Waltersmith refinery

• CPA involves 2000–4000-bpd crude for Waltersmith’s 5,000-bpd refinery
• First private commercial in-country crude refining
• Agreement 30 days after Buhari inaugurated Waltersmith

Seplat Petroleum Development Company Plc, a leading Nigerian independent energy company listed on both the Nigerian and the London Stock Exchanges, has signed a crude purchase agreement (CPA) with Waltersmith Petroman Oil Limited.

The CPA is for the supply of between 2,000 and 4,000-bpd from existing working-interest production from the Ohaji South Field within the OML53, for Waltersmith’s new 5,000-bpd modular refinery at Ibigwe Field, in Imo State.

Roger Brown, chief executive of Seplat, said: “We are delighted to sign this Crude Purchase Agreement with Waltersmith as it ensures that Nigerian crude will be refined locally by a Nigerian refiner. The agreement will eliminate losses we previously experienced on the export pipeline; meaning more revenue will be booked by Seplat for the same amount of oil produced from the field. Waltersmith’s refinery will also benefit the Nigerian economy by creating local jobs to refine our oil.”

This comes only 30 days after President Muhammadu Buhari inaugurated Waltersmith’s refinery in Ohaji, Imo State. It is Nigeria’s first private and biggest oil refinery, which perhaps marks the beginning of a departure from decades of petroleum products importation by Nigeria, Africa’s top oil producer. Latest figures by experts at the Centre for Gas, Refining and Petrochemicals (CGRP), University of Port Harcourt, said Nigeria spends some $30 billion annually importing petroleum products.

Previously, Seplat’s share of Ohaji South crude was primarily evacuated to the export terminal via a third-party crude handling agreement (CHA) with Waltersmith.

According to Brown, “the new agreement benefits Seplat by selling its crude oil directly to Waltersmith for refining, thereby eliminating crude losses and downtime experienced along the evacuation and export route.”

The transaction would also boost the capacity of Waltersmith in providing its products particularly to the immediate region of our operations, thereby supporting Seplat’s commitment to national energy security, the company said in a statement by Chioma Nwachuku, general manager, external affairs & communications.

Meanwhile, Seplat said it maintains its guidance of 48,000 – 52,000-bpd for the 2020 financial year.

Seplat says it is pursuing a Nigeria-focused growth strategy, and is well positioned to participate in future asset divestments by international oil companies, farm-in opportunities, and future licensing rounds. The company is a leading supplier of gas to the domestic power generation market.