Nigeria undertakes efforts to make country a top gas revenue earner

Jan 13, 2005 01:00 AM

A major effort towards making Nigeria a top gas revenue earner may have begun as the Federal Government plans a 30 tpy LNG mega-project at Olokola, in Ondo State.
The project, which will cost about N 780 bn ($ 6 bn), is a tripartite venture involving the Nigerian National Petroleum Corporation (NNPC), Chevron/Texaco and British Gas (BG). In its first phase expected to come on stream in 2009, it will produce 10 mm tpy.

Already named Olokola LNG (OK LNG), the initiative is part of the Federal Government's move to actualise President Olusegun Obasanjo's aspiration of a 70 mm tpy production capacity for the country soon.
The NNPC Group Managing Director (GMD), Funso Kupolokun, who alongside Mr J. Pryor, Managing Director of Chevron/Texaco and Dr Aished Sufi, President of BG, presented the project to the Ondo State government.
Kupolokun said it is the "biggest, single project ever witnessed in the country's petroleum sector. Olokola will at the peak of operation produce 1.5 to 1.8 bn cfpdof gas."

Adding that the project would confirm the country's rating as having the fastest growing LNG industry in the world, Kupolokun said apart from the $ 6 bn investment, service industries such as harbour, loading and marine terminals that would grow out of the project would cost another N 130 bn ($ 1 bn).
With the attainment of maximum production and marketing capacity, in which all the three players would participate fully, the OK LNG would have succeeded, in addition to the on-going Bonny LNG concern, to raise Nigeria's gas production to 52 mm tpy.

Kupolokun had in his presentation to the Ondo government, held at the state's Executive Chambers with Governor Olusegun Agagu and his cabinet in attendance, disclosed that President Obasanjo had directed that Nigeria should "earn as much revenue from gas as it is earning from oil."
According to him, "ordinarily, that is a tall order because when he made that commitment in 1999, we were earning zero from gas. But I can say that because of the various mega-projects that we have, we will be inching close to that aspiration. In essence, it means that we will be earning close to $ 8 bn from gas annually and all this is taking place between 1999 and 2007. We know that to realise the President's aspiration, we will need to deliver 70 mm tpy LNG equivalent of gas volume, and that is $ 70 bn in investment and infrastructure."

Stressing that the project is one of the several mega ventures required to meet the presidential aspiration, Kupolokun said the Final Investment Decision (FID) of the project would be made early in 2006 in accordance with the Work Plan. The FID of the Bonny LNG project was made last July.
He said a joint study team had already been raised among all the major stakeholders and it had started work in Nigeria and Houston, Texas, United States (US) towards the FID. He added that the NNPC would expedite action in getting the needed approval of both its board and the Federal Government for the project immediately so that production would be attained by 2009.

The NNPC boss added that another major benefit of the OK LNG project would be opportunities of direct gas exploration it would create in the industry.
His words: "With this initiative, we will create a business drive for gas exploration. As at today, gas that has been found were found only in the course of exploring for oil. With this, we are going to explore directly for gas, of which we have 185 tcf of reserve placed between associated and non-associated gas in the ratio of 50:50". He disclosed that part of the project would be the laying of a gas pipeline from Escravos to link Olokola with Lagos and the existing gas pipeline to service the West Africa sub-region.

Explaining the rationale behind the siting of the project at Olokola, Kupolokun said: "At the location, we do not have the sort of silting that we have in the Delta region, therefore dredging will be minimal. It is a lot of hard plain ground and the depth can take ocean-going vessels."
In his comment after Kupolokun's presentation, Agagu, whose support for the project had earlier been sought by the NNPC team, said: "Ondo State will provide a conducive environment for this gigantic project." He thanked the Federal Government "for its foresight and doggedness in pursuing projects that will in the near future make Nigeria one of the greatest countries in the world".
Agagu said Olokola is a major project that Ondo government was very much interested in as a lot would be impacted in terms of development to the state through it.

Source: LiquidAfrica
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