Oil multinationals to build $ 6 bn gas plant in Nigeria

Jul 25, 2006 02:00 AM

Several multinational oil giants took a step toward building a $ 6 bn (EUR 4.75 bn) liquefied natural gas plant in a free trade zone in Nigeria, signing an agreement on terms that will govern the deal, an official representing their joint venture company said.
The deal is being driven by OKLNG Company, which includes Chevron, Royal Dutch Shell, British Gas and the Nigerian state-owned oil company. OKLNG announced in January 2005 it would build the plant and hoped to start production by 2009.

OKLNG signed a memorandum of understanding in the capital, Abuja, with two regional governments running a free trade zone on Nigeria's southwest Atlantic coast. The memorandum outlines the terms that will govern the investment, company spokesman Hakeem Adeoye said.
The plant will be built in the Olokola Free Trade Zone, which is run by the Ondo and Ogun state governments, Adeoye said.

The Nigerian National Petroleum Corporation owns 49.5 % stake in the plant, followed by Chevron and Shell with 18.5 % each, and British Gas with 13.5 %. Construction of the plant is scheduled to start before the end of this year.
Oil-rich Nigeria is believed to be even richer in natural gas, with proven reserves exceeding 170 tcf, most of it barely exploited. More than 60 % of the natural gas occurring with oil production in Nigeria is simply burned away for lack of investment in gas-gathering facilities.

Growing violence by militants in the main southern oil and gas region, fighting for local control of its wealth, has cast a shadow of insecurity on oil and gas investments there.
More than a quarter of Nigeria's daily oil exports of 2.5 mm barrels have been cut or hampered by attacks by militants since the beginning of the year.

Nigeria's first major natural gas plant on Bonny Island in the southern Niger Delta -- jointly owned by Royal Dutch/Shell Group of Cos., France's Total, Italy's ENI and the Nigerian state oil company -- has grown from an initial investment of $ 3.8 bn (EUR 3.01 bn) in 1999 to over $ 10 bn (EUR 7.91 bn) after several expansions.
Another gas plant due to start production at another coastal town, Brass, in 2009, will be operated by ENI, with ChevronTexaco, ConocoPhillips and the Nigerian oil company as partners.

Source: Associated Press
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