NNPC and Shell sign MoU for OKLNG project in Nigeria

Jul 25, 2006 02:00 AM

Nigeria's quest for clean sources of available natural gas got a boost with the signing of a Memorandum of Understanding to formalise the $ 6 bn Olokola Liquefied Natural Gas (OKLNG) project.
With the MoU, the project with a total production capacity of 22 mm tpy will make Nigeria one of the largest exporters of LNG when the project comes on stream in 2011.

Group Managing Director of Nigerian National Petroleum Corporation (NNPC) and chairman of OKLNG, Mr Funsho Kupolokun, broke his leave of absence to sign on behalf of the sponsors of the project, NNPC, which owns 49.5 % equity; Chevron OKLNG Holdings (18.5 %); Shell Gas & Power Developments (18.5 %); and BG International (13.5 %).
Governor Olusegun Agagu of Ondo State signed for the host communities, Ogun and Ondo States. Other stakeholders -- Olokola (OK) Free Trade Zone Company and the Nigerian Export Processing Zones Authority -- were also represented.

Kupolokun explained that the signing was important for the project because it would enable them move forward with it within the FTZ.
"This is essential for the project because it provides a fiscal and regulatory framework as well as support facilities and services that will enable the project to be developed and implemented smoothly," he said. He explained that the project was part of a national policy of aggressively developing and monetising Nigeria's abundant natural gas reserves, and to have a portfolio of natural gas and light sweet crude oil exports for a world demanding cleaner burning, low CO2 emission fuels, because of environmental pollution and global warming.

OKLNG is to combine forces with Brass LNG, Bonny LNG, which is already operational, and the Ecravos Gas-to-Liquids (EGTL) project to achieve these objectives, the NNPC chief stated. According to Kupolokun, the MoU is a key -- expression of confidence in Nigeria as a place to do business.
"By 2012, when all the four OKLNG trains would be on stream," he added, "Nigeria's gas exports from all the LNG projects, the EGTL as well as the West African Gas, Pipeline (WAGP) project will exceed 2 mm barrels of oil per day.”

"Nigeria needs a massive increase in its electricity generating capacity in order to meet the current shortfall in supply and to satisfy the future needs of a society striving to achieve a high GDP growth rate. In view of this we are structuring all our upstream gas development programmes to cater for our domestic requirements, including the provision of gas for the new gas-fired power plants that will provide the additional electricity generation capacity that the country needs.”
“Gas supply to OKLNG and all our other existing and planned gas exports will fit into our overall gas development strategy of satisfying our domestic needs in a cost-effective manner."

According the project manager, Dr Funmi Coker, with the signing of the MoU, the next step would be to register the OKLNG Free Trade Zone Enterprise and commence construction of the project’s pioneer facilities immediately.
"We haveachieved a great deal," he remarked, "but the task ahead remains immense. We have to implement a complex, multi-billion dollar LNG and natural gas liquids project and function in a desperately deprived area with no roads, no electricity and no pipe borne water."

Studies for the development of the project began in 2005 following the signing of collaboration MoU among the sponsors. The design of the OKLNG complex is for four LNG trains of 5.5 mm tpy each and will produce substantial quantities of natural gas liquids as a by-product.
All the technical work on the project is billed for completion by the end of this year. The Governors of Ogun and Ondo States, Otunba Gbenga Daniels and Dr Olusegun Agagu assured that they have put measures in place to ensure that peace reigns in the host communities.

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