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DMEA TRANSPORT DMEA

San Leon Energy acquires 10% of

ACOES oil pipeline operator

NIGERIA IRELAND’S San Leon Energy has taken a 10% The network will allow its users to avoid dis-
stake in Malta-based Energy Link Infrastructure ruptions related to the use of NCTL, a 97-km
Ireland’s San Leon (ELI), the owner of an oil pipeline network now pipeline that passes through the Niger River
Energy has taken a under construction in Nigeria. Delta. The pipeline typically carries 150,000-
10% stake in Malta- In a statement, San Leon said it had arranged 200,000 bpd of crude oil to a terminal facility
based Energy Link to pay $15mn for an equity stake in the Alter- on Bonny Island, but it is frequently targeted by
Infrastructure (ELI), the native Crude Oil Evacuation System (ACOES), vandals and thieves and was taken offline several
owner of an oil pipeline which will serve as a dedicated transport route times last year.
network now under for production from OML 18. This licence area San Leon described ACOES as a safer route
construction in Nigeria. lies mostly onshore south of Port Harcourt. It for production from OML 18. The new system
contains multiple oilfields and is operated by will have “a significant effect on the operation
Nigeria’s Eroton Exploration & Production. of OML 18, primarily through the reduction of
According to the statement, San Leon’s pay- downtime and losses associated with the existing
ment will come in the form of a $15mn share- export route,” it said in the statement.
holder loan carrying a coupon of 14% per year ACOES will charge fees comparable to the
over a period of four years. Following a one-year cost of pumping crude through NCTL, it added.
grace period that will begin on the date of invest- The company also called the deal with ELI a
ment, ELI will have to make payments on the potential source of profit in the medium and long
loan on a quarterly basis. term. It explained that its 10% stake would entitle
San Leon will disburse the funds in two it to a portion of the fees that “ELI, through its
tranches and is due to release the first tranche of Nigerian subsidiary, will earn … for transporting
$10mn before the end of this week. It will then and storing crude oil from OML 18 and potential
make the second tranche of $5mn available in third parties.”
the fourth quarter of 2020, once Midwestern Oisin Fanning, San Leon’s CEO, expressed
Leon Petroleum, another Nigerian company, satisfaction with the acquisition. “We are
makes its next scheduled payment on loan notes. delighted to make this investment, which is in
When finished, ACOES will consist of a line with our strategy of investing in assets with
pipeline with a throughput capacity of 100,000 near-term cash flow, where the initial investment
barrels per day (bpd) and a floating storage and is considered to be of limited risk and where
off-loading (FSO) vessel that can hold 2mn bar- there is material upside,” he said. “The ACOES
rels of crude. It will serve as an alternative to the [network] is expected to generate regular cash
existing Nembe Creek Trunk Line (NCTL) and flow once commissioned in the coming quarters,
will only handle oil from the OML 18 licence whilst also providing the significant benefits to
area. downtime and losses reduction for OML 18.” ™

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