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Shell sees Nigeria Soku gas output restored soon


Tue Feb 24, 2009 6:46am EST

* Pipelines repairs under way

* Nigeria supplies 10 percent of world LNG

* Nigerian oil industry plagued by militant attacks, thieves

* Shell finds 101 illegal taps in pipelines around Soku


By Randy Fabi

ABUJA, Feb 24 (Reuters) – Royal Dutch Shell (RDSa.L) is hopeful output at its Soku gas plant, which supplies Nigeria’s main LNG facility, would be restored in the coming weeks after the completion of pipeline repairs, it said on Tuesday.

Shell declared force majeure in November on its gas supplies to Nigeria LNG Limited, which supplies 10 percent of world liquefied natural gas, after thieves tapping into pipelines forced it to shut down the plant for repairs.

“Hopefully soon, in the coming weeks, we can bring production back on,” Ann Pickard, Shell’s regional executive vice president for Africa, told an industry conference in Abuja.

She said 1.6 million tonnes of liquefied natural gas had been lost since the plant shut down, equivalent to 26 LNG cargoes and costing the Nigerian government $180 million a month.

LNG is gas cooled to liquid form and shipped in special tankers to markets in the developed world — particularly Europe and the United States — where it can be used for power generation or for making chemicals.

Nigeria LNG, which exports 22 million tonnes per year of compressed gas, is controlled by a group of Western companies including Shell, Total (TOTF.PA) and Eni unit Agip (ENI.MI). State-run NNPC owns 49 percent.

The company said when Soku shut down that it was trying to optimise feedgas from other suppliers but would not be able to make up the entire shortfall.

NLNG’s export plant is located on Bonny Island, an industry hub in the restive Niger Delta and an area which has been a frequent target of attack by armed criminal gangs and pirates.

Militants have blown up crude oil pipelines and kidnapped foreign oil workers in the delta in recent years to push demands for a fairer share of the region’s natural wealth, but the gas industry had long been relatively untouched by the unrest.

Armed gangs have taken advantage of the insecurity to tap into pipelines and engaged in a lucrative trade in stolen oil.

Pickard said Shell had found 101 “hot taps” — illegal connections — into condensate pipelines around Soku in December alone.

“The plant could not be operated safely with that amount of condensate theft,” she said. (Writing by Nick Tattersall; editing by James Jukwey)


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