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Nigeria: Plans for two more LNG facilities

Plans emerged in January for two more liquefied natural gas (LNG) export schemes, led by ChevronTexaco and ExxonMobil, which could raise the country's total number of LNG complexes to five.

ChevronTexaco says that, in association with the UK's BG and Nigerian National Petroleum Corporation (NNPC), it will carry out a feasibility study for a new facility on the western part of the Niger delta. The location will be Olokola, where the Ogun and Ondo state governments are setting up a free-trade zone and plan to construct a deep-water port. ChevronTexaco's Escravos gas facilities are nearby. Nigerian newspapers quoted NNPC's managing director, Funsho Kupolokun, as saying the facility will have a capacity of 3.0m tonnes a year (t/y), will cost $6bn and is targeted for start-up in 2008.

ExxonMobil's plan is for a new facility on Bonny island, in the eastern part of the delta, where the country's existing LNG complex was built. A preliminary agreement signed with NNPC provides for pre-front-end engineering design (Feed) work to be carried out.

Gas will be sourced from ExxonMobil-operated fields, a capacity of 4.8m t/y is indicated and the plant might be integrated with a new 200 megawatt generating facility. The start-up target is 2010.

There has also been progress recently on an earlier plan for an LNG complex on the coast of the central Niger delta, at Brass. The Brass LNG venture – made up of ChevronTexaco, Eni and ConocoPhillips (each with 17%) and NNPC (49%) – awarded a Feed contract to Bechtel in November, on a schedule that could see the facility in operation in the second half of 2009.

Brass LNG is planning to build a two-train plant with a total capacity of 10.0m t/y, drawing on gas from ChevronTexaco and Eni fields nearby. The award of the engineering, procurement and construction contract for the $3bn facility is targeted for the third quarter of 2006. The Brass LNG venture resulted from an agreement towards the end of 2003 to merge ChevronTexaco's plan for a western-delta facility with Eni's plan for a complex near its Brass terminal – although the plan for the western facility has now been reactivated.

A fourth new LNG plant could be constructed if Shell's and Statoil's studies into a floating facility are positive. The companies are considering installation of the world's first floating LNG complex over their Nnwa-Doro structure in the neighbouring OPL 218 and OPL 219 licences.

The existing NLNG complex at Bonny – owned by Shell (25.6%), Total (15.0%), Eni (10.4%) and NNPC (49.0%) – has a capacity of 8.85m t/y from three trains. Under the NLNGPlus expansion, Trains 4 and 5, each of 4.1m t/y, are due to start-up in the middle of this year and in early 2006 respectively, raising total capacity to 17.05m t/y together with 3.4m t/y of liquefied petroleum gas.

The NLNGSix expansion, given the go-ahead last summer, will see a sixth train of 4.1m t/y come into service in late-2007. The complex will then be one of the world's largest, with a capacity of 21.15m t/y.  

South Korea: Cheaper gas for Kogas

In the latest signs of tightening competition for liquefied natural gas (LNG) sellers in Asia, Kogas secured substantial discounts on three LNG purchase tenders it awarded last month. The Malaysia LNG, Yemen LNG and Sakhalin-2 projects will supply the state-run utility with a combined 5.1m tonnes a year (t/y) of LNG at prices as low as $3.80/m Btu, around 40% cheaper than Kogas' existing agreements.

Malaysia LNG and Sakhalin-2 will both supply 1.5m t/y of LNG, with Kogas having an option for a further 0.5m t/y from each.

Yemen LNG will supply 1.3m t/y, with an option of another 0.7m t/y. The deals will run for 20 years, with deliveries commencing in 2008.

Kogas has been struggling to keep pace with domestic gas market growth and has had to import cargoes from as far afield as Algeria in recent winters. South Korean LNG demand is expected to rise by 5% a year over the next decade and a further long-term contract for 3m t/y is scheduled to be awarded in 2010.

Kogas also beat off internal competition from two consortia, headed by units of state-run Korea Electric Power, for the right to import LNG. The electricity generating companies, which buy around a third of the LNG imported by Kogas, argued that they should be allowed to import LNG directly to help cut their fuel bills, but the energy ministry said their import proposals were not as competitive as the deals Kogas negotiated.

Other shortlisted candidates for the tenders included the Woodside Energy-operated North West Shelf project. Woodside said it was disappointed to lose out on the contract, but still intends to approve the construction of a fifth LNG train for NWS LNG in the first half of this year.

Malaysia LNG is owned by Petronas (60%), Royal Dutch Shell (15%), Sarawak state (10%), Nippon Oil (10%) and Mitsubishi (5%); the Sakhalin-2 project by Shell (55%), Mitsui (25%) and Mitsubishi (20%); and Yemen LNG by Total (42.9%), Yemen Gas (23.10%), Hunt Oil (18%) and two South Korean companies, SK (10%) and Hyundai (6%).

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