Seplat Petroleum Development Co. (SEPLAT), a Nigerian energy producer that raised about $500 million from investors last month, signed a natural gas supply deal with with Azura Power West Africa Ltd. as part of a plan to boost output of the fuel, Chief Executive Officer Austin Avuru said.

Seplat, which currently produces about 110 million standard cubit feet of gas daily, is investing $300 million in a new gas processing unit at its Oben gas facility in the southern Edo state after signing a 15-year term-contract to supply 160 million cubic feet a day of gas to the Azura-Edo power plant, he said.

“By the first quarter of 2017, we will be supplying gas to five power plants in the country, that’s our drive,” Avuru said yesterday in an interview in Abuja, the capital . “We will be supplying between 350 and 400 million cubic feet of gas a day to power plants and industries in Nigeria.”

To achieve this, Seplat will boost its gas processing capacity by 150 million cubic feet daily and drill two gas wells annually over the next three years to meet its target and have the required volume to support its contract, as well as create a supply buffer of at least 15 percent, according to Avuru.

Nigeria, the holder of Africa’s largest gas reserves, loses at least $3 billion in revenue a year by burning off gas pumped together with crude oil, according to the Petroleum Ministry. The West African nation has been working on a plan to increase domestic gas prices to spur supplies to power generators.

Seplat sells its gas for about $3 per 1,000 cubic feet to power plants. The price for the fuel has risen from about 20 cents “only a couple of years ago,” according to Avuru.

Seplat’s share price rose 0.1 percent to 242 pounds in as of 9:11 a.m. in London.

Source: Bloomberg (by Elisha Bala-Gbogbo)