Oando/Eni consortium to spend $3bn on Obiafu CPF

The Oando/Eni Consortium, which has the mandate to build own and operate a natural gas central processing facility in the Central Franchise Area at Obiafu, Rivers State, under the Nigerian Gas Master Plan, is preparing an investment of between $2bn and $3bn for the project, our correspondent has learnt.

A source close to the project, who asked not be named because he was not authorised to comment on it, said that the consortium was already preparing to award a Front End Engineering and Design contract for the project.

The Federal Government had, last month, awarded the mandate to construct the gas plant to the consortium. The award letter was presented to the consortium by the Permanent Secretary, Ministry of Petroleum Resource, Mr. Musa Sheikh.

The CPF will process wet gas received from oil fields in Rivers and Bayelsa States held by oil majors Shell, Agip, Chevron and Total in conjunction with the Nigerian National Petroleum Corporation.

This programme is part of the government’s drive to deepen gas utilisation, resolve power supply deficit and end gas flaring.

Under the plan, gas will be made available to the local market for conversion to liquid fuels and for the provision of feedstock for fertiliser and petrochemicals plants.

On completion, the Oando-ENI CPF, is expected to process about 600 million standard cubic feet of gas per day to be made available to the domestic market.

In addition, gas-based industries such as methanol, fertiliser and petrochemical production plants are ancillary beneficiaries with enormous impact on job creation and industrialisation in the country.

The Federal Government awarded the Obiafu CPF mandate on March 24,2011, to Oando/Eni consortium following an international tender process initiated three years ago by the Nigerian Gas Master Plan Unit and the Ministry of Petroleum Resources who were looking for investors with the right mix of strategy, technology and capital to develop gas infrastructure. Fifteen international oil and gas firms were involved in the process.

Before the new arrangement, all gas processing facilities had been developed for mostly export-oriented projects.

In order to facilitate and promote the availability of gas for domestic consumption, the oil and gas producing areas have been divided into three zones (Western, Central and Eastern) with one CPF envisaged for each zone to process all gas produced in that zone. The development of central processing facilities will lead to improved economics of scale and the availability of gas for the domestic market.

Commenting on the award, the Group Chief Executive, Oando PLC, Mr. Wale Tinubu, said, “I am delighted that the Oando – ENI consortium has been awarded this mandate and commend the government’s decision to partner leading private sector investors to accelerate the development of the gas infrastructure required for industrial development.

The initiatives announced by the President will deliver a gas driven industrialisation that will drive regional transformation and new prosperity in the short to medium term. With gas reserves estimated at 187 trillion cubic feet, Nigeria is taking definite steps to translate this huge resource into tangible social development and value creation.”

He added, “The selection of our consortium to develop the Central Processing

Facility and associated infrastructure is an acknowledgement of our track record and commitment to the development of the energy infrastructure to boost local industries. Oando’s role as the core investor affirms the government’s determination to increase the participation of indigenous companies as the main platform for the development of our oil and gas industry.”

Chief Executive Officer, Oando Gas and Power, Mr. Bolaji Osunsanya, also said, “We fully understand the challenges and responsibility that this confers on our consortium. We accept this challenge and confirm that this consortium will leave no stone unturned as we work to meet the objectives of this game-changing investment.”

Source : Punch