NNPC, ChevTex, BG & Shell Ink Deal on Olokola LNG Project

The Nigerian National Petroleum Corporation, Chevron Nigeria Ltd, BG International, and Shell Gas & Power Developments BV signed a Memorandum of Understanding on the Olokola Liquefied Natural Gas project to be sited in Olokola Free Trade Zone.

The project is the outcome of two separate studies conducted by Chevron and BG, and Shell, which proposed to NNPC the development of their respective greenfield LNG projects in the Olokola area, due to its natural deepwater berth and other technical reasons. The projects' target shipment dates are 2009 and 2010 respectively.

In view of the proposed timing and location of the two independent projects, NNPC identified the opportunity for significant synergy and cost savings to be achieved by merging the two projects into one.

Consequently, the following integration model was selected:

  • A 4 train, 20 million tons per annum project
  • Joint ownership of all facilities, except for the individual trains
  • Single technology
  • Single operator
  • A common EPC contracting strategy
  • Individual train owners to buy their own feed gas and sell their own LNG
  • For Corporate Governance, a multi- company structure is proposed. There will be a common facilities company to be known as "OKLNG" as well as an Operating Company; "OKLNG" OpCo. In addition there will be train companies for each of the train joint ventures

It is worthy of note that the Olokola LNG has respected the policy directive of President Olusegun Obasanjo that all LNG projects must incorporate sufficient power generation for export into the national grid in order to boost power supply.

The Federal Government is very committed to this and other gas projects not only as a way of increasing the country's revenue base, but also to reduce environmental hazards occasioned by gas flaring for which Nigeria was known in the past.