Nigeria LNG construction contract let
A plan to build a natural gas liquefaction plant at Bonny Island, Nigeria, passed a major hurdle Dec. 15, after a gestation period of almost 30 years, with award of a construction contract.
Shell Petroleum Development Co. of Nigeria Ltd., 25.6% shareholder and technical operator of the $4 billion LNG export project, said the signing came just ahead of a critical deadline.
Shell said, If the construction contract had not been signed by the end of 1995, a complex and interdependent series of other contracts, including agreements for the export of Nigerian gas, would have collapsed. This would have terminated the LNG project with little hope of revival.
The construction contract went to a group made up of Technip AS of Paris, Snamprogetti SpA of Milan, M.W. Kellogg Co. of the U.S., and JGC Corp. of Japan.
Late in 1994 the group was chosen as preferred main contractor for construction, with design of the plant to be based on the Air Products & Chemicals Inc. process (OGJ, Oct. 3, 1994, p. 31).
Shells partners in Nigeria LNG Ltd. are Nigerian National Petroleum Corp. 49%, Elf Aquitaine SA 15.4%, and Agip SpA 10%. The LNG project is expected to cost about $4 billion.
The most recent threat to the project has been a political backlash against the Nigerian government, in which Shell was singled out for criticism by protest groups, following execution of leading antigovernment protesters (OGJ, Nov. 20, p. 37).
Brian Anderson, managing director of Shell Nigeria, said, We recognize there have been calls for the project to be halted as a gesture of political protest. We respect these views, and understand the concerns they reflect. But we cannot accept that this would contribute to the good of Nigeria.
Anderson said construction of the LNG project will take 4 years, while no revenue will accrue from sales of LNG until 2000. With early revenues earmarked to pay back capital investment, Nigeria LNG shareholders are not expected to see dividends until after 2007.
Italian power generator ENEL earlier agreed to buy 122.5 bcf/year of LNG from the plant. This was seen as a critical deal because it means about 90% of the projects 252 bcf/year capacity is committed to buyers (OGJ, July 17, Newsletter). Copyright 1995 Oil & Gas Journal. All Rights Reserved.