TIDMSAVE
RNS Number : 0822O
Savannah Energy Plc
05 February 2021
5 February 2021
Savannah Energy PLC
("Savannah" or "the Company")
Accugas' First Gas-to-CNG Sales Agreement announced with Mulak
Energy
Customer Benefits include 40% Saving in Energy Costs and 30%
Reduction in Carbon Footprint [1]
Savannah Energy PLC ("Savannah" or the "Company"), the
African-focused British independent energy company sustainably
developing high quality, high potential energy projects in Nigeria
and Niger, is pleased to announce that its Accugas subsidiary has
entered into a new gas sales agreement ("GSA") with Mulak Energy
Limited ("Mulak").
The GSA is initially for a seven-year term. It envisages the
supply of gas produced by Savannah's majority-owned Uquo field for
an initial two-year period on an interruptible basis (the
"Interruptible Gas Delivery Period") and the subsequent five years
on a firm contract basis (the "Firm Delivery Period"). During the
Interruptible Gas Delivery Period, Mulak is able to nominate a
maximum daily quantity of up to 2.5 MMscfpd. Volumes in the Firm
Delivery Period will be agreed by the parties before the end of the
Interruptible Gas Delivery Period. The GSA is priced to reflect
Mulak's status as an industrial customer; Accugas, therefore,
expects to see its weighted average gas sales price realisation
increase as a result of this contract, without the need for any
incremental capital expenditure beyond our previously announced
plans. [2] Sales under the GSA benefit from a bank guarantee
arrangement from an investment grade credit rated international
bank.
Mulak is a member of the Mansour Group, the leading Egyptian
multinational conglomerate with operations in more than 100
countries and annual revenues exceeding US$7.5 billion. The
agreement for the supply of gas to Mulak's Compressed Natural Gas
("CNG") Nigerian project represents Savannah's first Gas-to-CNG
sales agreement. Mulak initially plans to distribute CNG to its
industrial customers in Rivers State with the CNG to be substituted
for diesel in generators supplied by the Mantrac Group, also a
member of the Mansour Group and one of the world's largest dealers
in Caterpillar machinery, power systems and equipment. Mulak is in
a unique position to exploit the synergies with Mantrac's business
in Nigeria through the conversion of Mantrac's existing customer
base of approximately 400MW of diesel-fuelled generators to
CNG-fuelled generators. This is expected to provide Mantrac
customers with up to a 40% saving in energy costs and a 30%
reduction in their carbon footprint.(1) Sales under the GSA are
expected to commence in 2022 and, following the initial two-year
period, Mulak has indicated that it is seeking to expand its CNG
sales on a pan-Nigeria basis to Mantrac customers.
Accugas continues to make good progress in relation to agreeing
further potential new gas sales agreements with new customers,
further updates of which will be provided as appropriate in due
course.
Andrew Knott, CEO of Savannah Energy, said:
"We are delighted to announce this new gas sales agreement with
Mulak Energy and the Mansour Group. This recognises, Accugas'
status as the most reliable supplier of natural gas in Nigeria. Our
first Gas-to-CNG agreement is hugely exciting as it represents
Savannah's entry into the compressed natural gas market, which we
see as offering strong growth potential for our business over the
course of the next decade. The CNG market significantly extends the
reach of our existing 260km pipeline network into light industrial
and even domestic power generation without the need for further
investment in pipelines. For example, the Mansour Group subsidiary,
Mantrac, currently has an installed customer base of approximately
400MW of diesel-fuelled power generation, which has grown every
year for the last decade. I would like to thank the Mansour Group
for choosing to partner with Accugas and we look forward to
providing them, and their customers, with a reliable, lower cost
source of energy for power generation with an estimated 30%
reduction in the carbon footprint of their existing diesel
generators."
Omar Hassan, CEO of Mulak Energy, added:
"Mulak Energy is extremely pleased to have entered into this gas
sales agreement with Accugas-Savannah Energy. As part of the
Mansour Group, Mulak Energy strongly believes in Nigeria's
potential and future. Moreover, we are certain that gas will play a
central role in fuelling Nigeria's growth and prosperity for the
foreseeable future and are proud to be participants in this
important development.
We foresee potential that this agreement with Accugas-Savannah
will serve as a platform for increased cooperation between our two
companies as we work to achieve our shared vision of bringing ever
larger volumes of gas to the Nigerian market creating value for our
shareholders and ultimately the industries and people of
Nigeria.
We thank the teams at Accugas-Savannah for their efforts and
cooperation over the past months to get this agreement finalised
and look forward to working with them over the coming years."
For further information, please refer to the Company's website
www.savannah-energy.com or contact:
Savannah Energy +44 (0) 20 3817 9844
Andrew Knott, CEO
Isatou Semega-Janneh, CFO
Sally Marshak, Communications
Consultant
Strand Hanson (Nominated Adviser) +44 (0) 20 7409 3494
James Spinney
Ritchie Balmer
Rory Murphy
finnCap Ltd (Joint Broker)
Christopher Raggett
Kate Washington
Tim Redfern +44 (0) 20 7220 0500
Panmure Gordon (UK) Ltd (Joint
Broker)
John Prior +44 (0) 20 7886 2500
Hugh Rich
Celicourt Communications +44 (0) 20 8434 2754
Mark Antelme
Jimmy Lea
Ollie Mills
The information contained within this announcement is considered
to be inside information prior to its release, as defined in
Article 7 of the Market Abuse Regulation No. 596/2014, and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
About Savannah Energy:
Savannah Energy PLC is an AIM market listed African-focused
British independent energy company sustainably developing high
quality, high potential energy projects in Nigeria and Niger, with
a focus on delivering material long term returns for stakeholders.
In Nigeria, the Company has controlling interests in the cash flow
generative Uquo and Stubb Creek oil and gas fields, and the Accugas
midstream business in South East Nigeria, which provides gas
contributing to over 10% of Nigeria's daily national average power
generation. In Niger, the Company has interests in two large PSC
areas located in the highly oil prolific Agadem Rift Basin of South
East Niger, where the Company has made five oil discoveries and
seismically identified a large exploration prospect inventory,
consisting of 146 exploration targets to be considered for
potential future drilling activity.
Further information on Savannah Energy PLC can be found on the
Company's website: www.savannah-energy.com.
[1] Energy savings and carbon footprint reduction estimates
provided by Mulak in relation to Mantrac customers.
[2] Capital expenditure plans as per Savannah's FY 2020 Trading
Update published on 25 January 2021.
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END
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