Gazprom Enters Development Talks with Nigeria

(Dow Jones Newswires from The Wall Street Journal)

OAO Gazprom and the Nigerian government are in early talks about a deal by which the Russian natural-gas company would help explore and develop the West African nation's huge gas resources, a senior Nigerian oil official and Gazprom officials said.

Gazprom spokesman Sergey Kupriyanov confirmed the company is in talks with Nigerian officials, saying, "We are interested in Nigeria, and the talks are under way." He didn't divulge a time frame.

A person at Gazprom said the company is keen to develop Nigeria's gas resources but couldn't provide a timetable for the talks. A Gazprom delegation visited Nigeria in December, this person said, for discussions on a variety of possibilities for participation in Nigeria's gas sector.

Gazprom's interest in Nigeria underscores the growing competitive threat of state-run companies to Western energy firms, which have found themselves increasingly losing out on deals to national companies that are often willing to take fewer profits to clinch deals.

Nigeria is Africa's biggest oil producer but also has the world's seventh-largest gas reserves, which until the past decade have been underutilized. For decades, the country has flared, or burned off, most of its gas because of the lack of infrastructure and a tiny domestic market.

Nigeria has built a handful of multi-billion dollar gas-export facilities in the past decade with the help of U.S. and European companies like Royal Dutch Shell PLC and Chevron Corp. Nigeria is a fast-growing gas exporter to the U.S. and Europe.

The government says a no-flare deadline this year for all companies operating in Nigeria remains in place and that financial penalties will be slapped on firms that don't meet the deadline.

(Dow Jones Newswires from The Wall Street Journal)