A Nigerian Senate committee asks Chevron Nigeria to explain why a gas-to-liquids joint venture with the state-run petroleum company cost about three times more to complete than initially estimated.
(Bloomberg) - A Nigerian Senate committee has asked Chevron Nigeria Ltd. to explain why a gas-to-liquids joint venture with the state-run petroleum company cost about three times more to complete than initially estimated.
The $10.3 billion invested in the Escravos facility was “astronomical,” given it was supposed to be built for a cost of about $3 billion, Gas Committee Chairman Bassey Akpan said Tuesday at a meeting in the capital, Abuja. The JV contract terms may have been violated because partner Nigerian National Petroleum Corp. wasn’t consulted on running over budget, Akpan said.
Isabel Ordonez, a Houston-based Chevron spokeswoman, declined to comment when contacted by e-mail.
Monday Ovuede, the director of the NNPC and Chevron Nigeria joint venture, said Chevron had acted in a “reasonable and prudent manner” carrying out the project. NNPC officials failed to attend several meetings and decisions had to be made to go ahead, Ovuede told the committee.
The 33,000 barrels per day Escravos gas-to-liquids plant began production in mid-2014, churning out mainly synthetic diesel, according to Chevron’s website. The plant supplies clean-burning, low-sulfur diesel fuel for cars and trucks, it says.
Sasol Ltd., the world’s biggest producer of fuel from coal, which had a 27.5 percent stake in the venture, sold its holding to Chevron in 2008 after the project’s cost more than doubled.
To contact Bloomberg News staff for this story: Elisha Bala-Gbogbo in Abuja at firstname.lastname@example.org To contact the editors responsible for this story: Antony Sguazzin at email@example.com Sarah McGregor, Dulue Mbachu
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