Savannah Energy has signed another gas sales agreement in Nigeria with Notore Chemical Industries.
The contract covers supplies of up to 10 million cubic feet per day of gas, for an initial term of one year. There is an option to extend.
Savannah’s 80% owned Accugas subsidiary struck the deal with Notore. The Accugas network connects to the offtaker’s fertiliser production plant via a Nigerian Gas Co. (NGC) pipeline from Ikot Abasi. As a result, deliveries will not require any further spending to begin.
“I am pleased to welcome Notore as a new gas customer to Accugas, representing our tenth customer site in total (versus three at the time of our acquisition of the Accugas business in 2019),” said Savannah CEO Andrew Knott.
“We look forward to developing our working relationship with Notore over the course of the coming months and years.”
Notore is based in the Onne Oil and Gas Free Zone, in Rivers State. Notore can produce 1,500 tonnes per day of urea and 1,000 tonnes per day of ammonia.
“We believe there may be a significant contribution to future revenues from this new GSA,” said Panmure Gordon analyst Ashley Kelty.
“While the interruptible terms of the contract do not guarantee regular offtake volumes, the increase in quantum of gas that Accugas may supply is, in our view, a clear indicator of the reliable performance of Accugas and good standing the company has with local companies.”
Accugas has a number of gas supply deals. In June, it agreed to supply up to 35 mmcf per day to power plants owned by TransAfam Power. In April, it agreed to supply up to 65 mmcf per day to First Independent Power. Both of these contracts involve gas going to power generation in Rivers State.
Savannah is in the process of refinancing its non-recourse $371 million debt facilities for Accugas. The company intends to redenominate the loan into naira, from US dollar. This would insulate Savannah from exchange rate worries.