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Lloyds List: Milestone in Nigeria LNG project

By: Olokola deal formalises link with free trade zone, writes Tony Gray, Lloyds List

Published: Jul 27, 2006

ONE of the world’s largest liquefied natural gas projects has taken another step forward.

Nigerian National Petroleum Corp and three foreign oil majors, including Shell, have signed a memorandum of understanding with the free trade zone in which the $6bn Olokola (OKLNG) project will be located.

The signing of the MoU by the sponsors of the LNG project, the Olokola Free Trade Zone Co, and the Nigeria Export Processing Zones Authority, marked ‘a further milestone in the progression’ of OKLNG, said Shell. The MoU formalises the relationship between the project and the free trade zone.

OKLNG has a design capacity of four LNG trains, each with annual production of 5.5m tons, or total production of 22m tons.

The project is to be implemented in phases, beginning with two trains providing a capacity of 11m tons a year.

But together with other projects in hand, it would make Nigeria one of the world’s biggest producers of LNG, possibly second only to Qatar. The partners in the project are the NNPC (49.5%), Chevron (18.5%), Shell Gas ‘ Power (18.5%) and BG International (13.5%).

Funsho Kupolokun, NNPC managing director and chairman of OKLNG, commented: ‘We are committed to taking the Olokola LNG project forward.

‘It is a key expression of confidence in Nigeria as a place to do business and in the coming years, we look forward to being just one of many local and international companies operating within the Olokola Free Trade Zone.’

Studies for the development of the OKLNG project started in April last year and a project development agreement was signed in February after a successful conclusion of this work.

‘This agreement is also an expression of the confidence Chevron, Shell and BG Group has in Nigeria as an attractive location for major oil and gas investment,’ Shell added.

The MoU does not represent a final investment decision by the partners.

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