Partners plan $7.5 billion expansion of Nigerian LNG project

By the OGJ Online Staff

HOUSTON, July 24 -- Partners in the Nigerian Liquefied Natural Gas (NLNG) Ltd. project plan to invest another $7.5 billion to add three production trains to that facility on Bonny Island, about 40 km south of Port Harcourt in southeastern Nigeria, officials said Tuesday.

Construction of the first addition to the plant's original two trains is already well under way, with start-up planned for October 2002, officials said (OGJ Online, Apr.16, 2001). The partners will make a final investment decision on trains four and five in the first quarter of next year, said officials. Those extensions have been designated "NLNG Plus."

"On completion of the third train of the plant and its liquefied petroleum gas (LPG) facilities, we will be able to process 100% associated gas at a level of 1.5 bscfd, equivalent to more than half of the gas currently being flared in Nigeria," said Andrew Jamieson, NLNG's managing director.

Adding LNG trains three and four to process more of that associated gas would help fulfill the Nigerian government's hopes of producing 4 million b/d of crude and increasing its oil reserves to 40 billion bbl by 2010, officials said.

Design studies began last year for the extension with the fourth and fifth trains, storage facilities, and related LPG plant and shipping expansions.

A limited joint-venture company incorporated in Nigeria in 1989, NLNG is owned by Nigerian National Petroleum Corp. 49%, Shell Gas BV 25.6%, TotalFinaElf affiliate Cleag Ltd. ELF; 15%, and Agip International BV 10.4%. Shell Gas Nigeria BV was retained by NLNG as project technical advisor for the $3.8 billion two-train base project in December 1993 (OGJ, p. 54, Oct. 23, 2000).

The LNG plant's first train began production in October 1999, while the second train came on line in February 2000. Last year, the plant announced earnings of $500 million from export of 55 LNG cargoes, officials said.

India, which wants to buy about 10 million tones/year of gas, is targeted to receive products from the third train when it comes on stream, officials said. NLNG is working to secure markets for the additional LNG it will produce from the fourth and fifth trains.

NLNG has an existing sales commitment under a 22.5-year take-or-pay agreement to supply gas to Italy, Spain, Turkey, and Portugal. About 5.78 million tones/year of LNG are being delivered to those markets, officials said.

In addition to its role as technical leader for the LNG project, Shell supplies more than half of the natural gas feedstock for the plant. Shell is increasing its gas supply for the third train and is "committed in principle" to meeting more than half the requirement for trains three and four -- some 1.6 bscfd of gas, said company officials.

That gas is expected to come from Shell's shallow offshore concessions. Shell also plans to invest in a 170 km pipeline to transport associated gas from the Nun River and the Gbaran/Ubie Nodes to supply trains four and five.

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