By the OGJ Online Staff
HOUSTON, Sept. 7 -- Phillips Oil Co. (Nigeria) Ltd., said Friday it has signed a memorandum of understanding with coventurers, the Nigerian National Petroleum Corp. and Nigerian Agip Oil Co. to develop a liquefied natural gas (LNG) plant in Nigeria.
The memorandum establishes a study team that will perform a conceptual evaluation of an offshore LNG facility, which would be nominally sized at 5 million tonnes/year. The Nigerian government also signed the memorandum.
The plant, expected to be onstream by 2007, will be located offshore in the Niger Delta near the existing Brass River crude terminal at a water depth adequate for loading LNG tankers.
The gas supply will come from gas reserves within onshore oil and gas fields operated by an existing joint venture among the companies.
The companies are coventurers in oil and gas exploration and production on the Niger Delta. Phillips holds a 20% interest in the joint venture, while Nigerian National Petroleum holds 60% and the operator, Nigerian Agip, holds 20%.
Robert Smith, managing director of Phillips Oil Co. (Nigeria) Ltd., said, "This will be a world-class LNG facility and the first to be located offshore.�
An existing LNG plant is on Bonny Island, east of the Niger Delta. In June 1999, after 3 years of construction, Nigeria LNG Ltd. (NLNG) completed a two-train, 5.9 million tonnes/year plant. Work is under way on train three.
NLNG, a limited joint-venture company incorporated in Nigeria in 1989, is owned by Nigerian National Petroleum 49%, Shell Gas BV 25.6%, Cleag Ltd. 15%, and Agip International BV 10.4%.
Phillips did not consider trying to get an equity stake in the Bonny Island plant, a Phillips spokesman in Bartlesville, Okla., told OGJ Online.
"Phillips is not concerned about competing with the existing plant. Our project is going to come online after they complete their plans for expansion so we would not be competing for the same long-term contracts," he said.
In February, Nigeria Presidential Advisor on Petroleum and Energy Rilwanu Lukman said Nigeria had begun plans to set up another LNG plant to be located west of the Niger Delta. At that time, multinational oil companies including ExxonMobil Corp. signed a memorandum of understanding to conduct a feasibility study. Other companies included Conoco Inc., Chevron Corp., and Texaco Inc.
ExxonMobil was chosen to lead the study team, Lukman said (OGJ Online, Feb. 21, 2001).
The LNG effort is part of the government�s determination to end gas flaring by 2008 and monetize large volumes of associated and non-associated gas.