By Grace Udofia  with Agency reports

Gas production is set to increase by 20 million cubic feet as Oando Group announced plans to invest $36 million, about N7.2 billion, in the construction of three gas-compression plants in the country within the next one year. In an interview with Bloomberg in Lagos, Bolaji Osunsanya said the plants with an initial capacity of 20 million cubic feet of gas per day, are to be located in Aba, Abia State; Port Harcourt, Rivers State; and a third to be located in central Nigeria.

According to him, with domestic gas demand projected to reach 5 billion cubic feet daily in the next two years, Oando is targeting big energy users such as cement and steel plants, who currently rely on diesel to generate at least 1.5 megawatts of power per factory, to switch to gas. Osunsanya noted that compressed to become more than 200 times smaller than its original volume, gas could be delivered to companies connected to pipelines during supply disruptions.

He further said that the company is building a business to truck natural gas to industrial users whenever they are cut off from pipeline supply. He said: “We’re basically creating a market for the future, markets that otherwise you won’t have been able to use pipelines to serve. Today, it is possible to truck compressed natural gas there.

“The technology can be utilised on all modes of transportation. Today it is trucks, but there is a future for rail and for barges, so we can wheel compressed natural gas through the rivers upstream.” Oando’s subsidiary, Oando Energy Resources, OER, a couple of weeks ago, had expressed optimism of meeting its medium term new production targets of 100,000 barrels of oil equivalent per day, boepd, and reserves of 500 million barrels of oil equivalent, MMboe by 2017.

OER, said such high expectations is being driven by its reserves, exploration drive and vision of becoming a leading exploration and production, E&P player in the Nigerian oil and gas sector.

The company further said that it is well on track to meeting these production targets with its recent announcement of an 82 percent increase in reserves despite the downturn in the sector. The company’s proved and probable net reserves, 2P reserves were significantly increased from 230.6 million barrels of oil equivalent, MMboe to 420.3 MMboe at an economic value of $545 million to $1.8 billion.

Also, Oando Plc had in July 2014, completed the acquisition of ConocoPhillips’ upstream oil and gas business in Nigeria for $1.5 billion, in which the cost outlay was arrived at after customary adjustments plus a deferred consideration of $33 million.

The transaction involved Phillips Oil Company Nigeria Ltd, ConcoPhilips Oil Company Ltd, in which the NNPC owns a 60 per cent interest and Nigeria Agip Oil Company, NAOC, 20 per cent, and 20 per cent non-operating interest in Oil Mining Leases, OMLs 60, 61, 62, and 63 as well as related infrastructure and facilities in the Agip Joint Venture, NAOC JV Ltd.

Conoco Exploration and Production Nigeria Ltd, CEPNL, also holds 95 per cent operating interest in OML 131 located 70 km offshore in water depths of 500m to 1,200m.

While Phillips Deepwater Exploration Nigeria Ltd, PDENL, holds a 20 per cent non-operating interest in Oil Prospecting Licence, OPL 214 located 110 km offshore in water depths of 800m to 1,800m.