Italian state electricity utility ENEL has canceled a contract to buy liquefied natural gas from Nigeria LNG Ltd., putting yet another obstacle before a planned liquefaction plant and export terminal project.
Nigeria LNG is suing ENEL for breach of contract, while ENEL claims a force majeure clause enables it to pull out.
ENEL's withdrawal was caused by a decision not to build an LNG receiving terminal at Montalto di Castro on the Tuscany coast, because of the expense of environmental conditions attached to the project.
Project status
Nigeria LNG recently reported that engineering and construction work for the project at Bonny Island, Nigeria, is well under way, and that six of seven LNG carriers required for exports have been ordered or chartered.
Nigeria LNG is owned by Nigerian National Petroleum Corp. (NNPC) 49%, Royal Dutch/Shell 25.6%, Elf Aquitaine 15.4%, and Agip SpA 10%.
The company was formed to realize a project that has taken almost 30 years to get under way (OGJ, Dec. 23, p. 34).
Natural gas will be bought at a delivery point near the field and transported by Nigeria LNG to the liquefaction plant.
The $4.5 billion LNG project will have capacity to export 4.1 million metric tons/year of LNG during 221/2 years beginning in 1999.
Contracts
Long term gas purchasing contracts are in place with three joint ventures in Nigeria operated by Shell, Elf, and Agip.
Long term LNG sales agreements had been signed for the entire output of the plant.
These were with ENEL, Spanish gas distributor Enagas, Turkey's Botas, and Gaz de France. ENEL reportedly had contracted to buy almost half the plant's output.
Nigeria LNG Managing Director Theo Oerlemans said, "That contract was a main element of the shareholders' decision to proceed with the project. This decision is totally unprecedented in the international gas industry."
Copyright 1996 Oil & Gas Journal. All Rights Reserved.
