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British Oil Company Makes A Drastic Cuts Of Expenditure In Nigeria By 15% To $100m

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Savannah Energy Plc, a British oil and gas company, has reduced its planned four-year capital expenditure in Nigeria by 15 percent from $118 million to $100 million. 

In a statement released on January 25, the company said it had amended its 2020-2023 Nigeria’s expenditure programme which was published in 2019 in Nigeria Competent Person’s Report (CPR).

Savannah Energy’s assets in Nigeria include the Uquo field, Stubb Creek field and Accugas. It also has energy projects in Niger Republic.

The company said the expenditure cut would result in principal work programme changes.

Only one one gas well would be drilled within the four-year period (as opposed to the previous four) on the Uquo field and the acceleration of the Uquo field compression project previously assumed to commence in 2026/27 to 2021/22.

Andrew Knott, chief executive officer of Savannah Energy, said: “Overall we have reduced our cost estimate for our indicative 2020-23 capital expenditure programme by around 13 percent, versus our previous indications and are guiding that we expect our underlying operating costs (which include maintenance expenditures) to track levels consistent with 2020 (in real terms) over the medium term.”

“It should also be noted that our 2021 guidance excludes contributions from any new gas sales agreements or any contribution from the R3 East development project in Niger, which would be incremental to this.”

Knott explained that 2020 was a “milestone year” for the company despite numerous challenges.

“In 2020 we grew revenues, reduced our underlying cost base and continued to provide gas contributing to over 10% of Nigeria’s daily national average power generation, highlighting the resilience of the business, ” he said.

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