Eric Watkins
Senior Correspondent
LOS ANGELES, Apr. 24 -- Japan's Sojitz Corp. and Sumitomo Corp. plan to participate in Nigeria's Olokola LNG project, joining state-owned Nigerian National Petroleum Corp., Chevron Corp., Shell Gas & Power Developments BV, and BG Group.
A basic agreement has been reached for LNG Japan Corp., a joint venture of Sojitz and Sumitomo, to acquire 3% of the stock in the operating firm from NNPC.
The first stage of the project is to build facilities capable of producing 11 million tonnes/year of LNG by 2010, with total costs expected to reach $7 billion.
LNG Japan, which plans to sell its 330,000-tonne/year share of LNG from the project in the US and Europe, will be responsible for about ¥25 billion of investment capital, equivalent to its interest in the operating company.
In early April, NNPC approved the award of a $14.5 million contract for the front-end engineering design of Olokola LNG to Delta Afrik Engineering Ltd., jointly owned by Deltatek Engineering Ltd. and Worley Parsons.
Delta Afrik also will construct major production platforms, living quarter platforms, and associated flares and bridges for Olokola LNG.
In April 2005, Chevron Nigeria Ltd. signed a memorandum of understanding with NNPC, BG, and Shell Gas & Power to jointly conduct and evaluate a feasibility study of the potential Olokola LNG project.
Shell said the project is the outcome of two studies conducted by Chevron, BG, and Shell, which proposed to NNPC the development of their respective greenfield LNG projects in the Olokola area due to their natural deepwater berths and other technical reasons. It said the projects' target shipment dates are 2009 and 2010 respectively.
An integration model was selected to include a four-train, 20 million tonne/year project; joint ownership of all facilities, except for the individual trains; single technology and a single operator; a common engineering, procurement, and construction contracting strategy; and an agreement that individual train owners buy their own feed gas and sell their own LNG.
Shell said there will be a common facilities company to be known as OKLNG, as well as an operating company, OKLNG OpCo.
Contact Eric Watkins at [email protected].