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Chevron, Shell pull out of Olokola LNG project

By on August 24, 2013

Four years after BG Group divested from Olokola LNG project, two other International Oil Companies, IOC, Chevron and Shell, have pulled out, a source has said.

Both companies have a combined shareholding of 39 per cent in the project, having 19.5 per cent stake each in the company.

According to the source, a senior official in the company, the pulling out of the oil majors is due to a number of factors, ranging from the lack of commitment on the part of the Federal Government to pursue the completion of the project and also the non-passage of the Petroleum Industry Bill, PIB

However, efforts to get the comments of the companies regarding the development, proved abortive, as Mr. Precious Okolobo and Mr. Kayode Adeboye, spokespersons for Shell and Chevron, respectively, refused to respond to enquiries put forward to them.

When contacted, both men promised to respond to the issue, but as at the time of going to press, their responses were yet to be received.

BG Group, the United Kingdom’s third-largest natural gas producer, had in August 2009, said it was pulling out from the LNG export project.

The Olokola LNG project was initiated in 2005, with the Nigerian National Petroleum Corporation, NNPC, as the major shareholder, with 46.75 per cent stake, while BG Group, which had earlier withdrawn, has 14.25 per cent.

The source said the project, which is the most cost-effective  LNG project in Nigeria, if allowed to come on stream, would have served as a major contributor to Nigeria’s economy development.

According to the source, a number of projects already undertaken at the site, risk being abandoned, such as the pioneer camp among others.

The source said, “The project was going ahead of schedule, all of a sudden, funding ceased.”

The Olokola Liquefied Natural Gas project is located between Ogun and Ondo States. The project was solidified in 2007 with the signing of an MOU between the shareholders. The plan of the project was for gas producers/owners to send natural gas to the facility where it would be converted to LNG for a fee and pumped into owner ships for sale.

The source said the frustration stems from the fact that many years after the memorandum of understanding (MoU) was signed, nothing concrete has been recorded.

According to the source, the MoU and shareholders agreement were signed in 2005 and 2007 respectively, Final Investment Decision was billed for 2007, while production was scheduled to begin in 2009; till date nothing concrete is seen.

“Presently, all the expatriates have left; the only people remaining are NNPC’s staff on secondment to the company and a few contract staff.”

 

 

 

[Vanguard]