Global Processing

Oil firms to divert more gas to Nigeria

June 2, 2008
According to Reuters, foreign oil firms will divert a greater proportion of their natural gas output in Nigeria for domestic use over the coming years as the country tries to end a crippling power crisis, President Umaru Yar''Adua said.

In a interview on state television recently, Yar''Adua said foreign companies had agreed to help meet rising domestic demand by increasing each year the amount of liquefied natural gas (LNG) they diverted to the West African country.

Nigeria''s largest LNG export plant, located on Bonny Island in the southern Niger Delta, is controlled by a group of Western companies -- Royal Dutch Shell , Total end Eni unit Agip .

State-run Nigerian National Petroleum Corp. owns 49 percent.

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

Nigeria''s government has said it wants to boost economic growth by generating much more power with gas, which unless more gas production facilities are built could lead to a shortfall in gas available for export and further tighten global supplies.

Demand for LNG has been fuelled by record high oil prices.

INVESTMENT NEEDED

Nigeria, the world''s eighth-biggest oil producer, suffers from chronic energy shortfalls which have been steadily getting worse as domestic demand rises.

Much of the country has been without mains electricity for weeks, forcing businesses to rely on expensive diesel generators and increasing the pressure on Yar''Adua''s one-year-old administration to resolve the crisis.

The country of 140 million people currently has a generation capacity of about 3,000 MW. South Africa, with a third of the population, has more than 10 times that capacity.

Nigeria has the world''s seventh-largest gas reserves at 180 trillion cubic feet, but has been unable to develop its gas industry to anywhere near full potential because of a lack of funds and regulation.

Nigerian energy officials have been on an international roadshow in recent weeks seeking funding for infrastructure which could help them to use gas domestically.

Russia''s Gazprom has said it hopes soon to reach a multi-billion dollar gas exploration deal with Nigeria.

The state of Akwa Ibom said this week it had signed a $12 billion deal with British gas and power firm Centrica Plc to build a new LNG plant.