Pan Ocean Oil Corporation Nigeria Limited has reached an agreement with Skye Bank Plc to fund the Ovade-Ogharefe Gas Processing Plant located in oil mining lease (OML) 98.
Pan Ocean, according to a statement, is the operator of the Nigerian National Petroleum Corporation (NNPC)/ Pan Ocean Joint Venture, owners of the OML 98 asset located in Ovade-Ogharefe Delta State, Nigeria.
The company holds 40 per cent interest in the OML 98 while the NNPC holds 60 per cent. Skye Bank is financing the 40 per cent equity of Pan Ocean under the Joint Venture.
The plant processes liquefied petroleum gas (LPG), Propane and other similar products. The project boosts government’s efforts to ensure zero routine flaring in exploitation of oil.
The construction of Ovade-Ogharefe Gas Processing Plant started in 2007 and was designed as a carbon emission reduction project with the capacity of delivering 200 million standard cubic feet per day (mmscf/d) of dry gas to the domestic gas market especially for power generation and industrial development.
The gas plant, according to the statement, is reputed as the largest in West Africa. It earns carbon credits for its operations under the Clean Development Mechanism (CDM) of the Kyoto Protocol where its operations were reported and established.
Pan Ocean had initiated a CDM certification for its gas utilisation project as part of its contributions to improving Nigeria’s image as a green-oriented country in line with the United Nation’s Kyoto protocol.
With the CDM, reductions in greenhouse gas emission from projects in developing countries are registered and monitored under the United Nations Framework Convention on Climate change (UNFCC) and sold to developed countries that have limits for their emissions.
It is in view of the highly capital intensive nature of the oil and gas sector that Skye Bank, according to the statement, chose to provide finance to support Pan Ocean in the realisation of the project.
Speaking on the development, the Executive Director, Corporate and Investment Banking, Skye Bank Plc, Mr Timothy Oguntayo, said the funding to Pan Ocean was another demonstration of the active supports of the bank towards actualising the Federal Government’s local capacity and content development in the oil and gas industry.
He noted that the gas plant would not only benefit all stakeholders but also improve Nigeria’s environment rating. According to him, among other things, the plant would ensure zero routine flaring in all areas of its operation due to the adopted modularised plant concept, which makes the plant expandable for additional gas finds in the concession area.
He said Skye Bank’s partnership with Pan Ocean Oil Corporation Nigeria Limited has been credited with the company’s success in processing gas, which could have been flared. But rather than flare the gas from its operation, Pan Ocean processes for meaning utlilisation and in compliance with the carbon credit scheme of the United Nations Framework Convention on Climate Change (UNFCC), which the company qualified for in February 2009.
Some of the hindrances to the development of the oil and gas industry in Nigeria include high capital requirement, dearth of critical trading infrastructure and inadequate manpower, he added.
Oguntayo reiterated that despite the challenges associated with oil and gas finances, Skye Bank would continue to support indigeneous investors who have defied the odds by making substantial investments in the subsector in order to raise the Nigerian flag high.
Known for its very tough and stringent entry requirements, which are difficult for the indigenous investors to meet, the oil and gas industry has been dominated by foreign corporations, which control at least 60 per cent of the industry occupying senior management positions, while highly skilled technical managers are expatriates.
The Nigerian Content Act is addressing the anomaly, but finance has been major impediment to the quick realisation of the gains of the Act.
Pan Ocean is the first oil and gas exploration and Production Company to sign the Gas Sales Aggregation Agreement (GSAA) with the Power Holding Company of Nigeria (PHCN) and Egbin Power Station two years ago and the agreement is for a period of 10 years.
