Savanna Energy’s Accugas signs agreement of supplying gas to Mulak Energy

NIGERIA – Savannah Energy, the African-focused British independent energy company, has announced that its Accugas subsidiary has entered into a new gas sales agreement (GSA) with Mulak Energy (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 and the subsequent five years on a firm contract basis.

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.

Sales under the GSA benefit from a bank guarantee arrangement from an investment grade credit rated international bank.

“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,” Andrew Knott, CEO of Savannah Energy said.

“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.

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 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,” Omar Hassan, CEO of Mulak Energy said.

“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.”

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.

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