NLNG Launches Third Train Expansion Project

The Board of Directors of Nigeria LNG Limited (NLNG) awarded the Engineering, Procurement and Construction (EPC) contract for a third LNG train at Finima, Bonny Island, Rivers State, Nigeria to the TSKJ consortium (Technip, Snamprogetti, MW Kellogg and JGC Corporation) at their Board Meeting which started on Wednesday, 17^th February, 1999. The new train will be similar in capacity and design to the first two trains presently being constructed by TSKJ. The expansion will increase NLNG's current processing capacity by 50% - an additional 3.7 billion cubic metres per annum.

Over 70% of this additional LNG has been sold to Enagas of Spain. The duration of the LNG sales contract is for 21 years. Discussions with other potential buyers for the remaining volumes are well advanced.

The project gives the opportunity to extend the range of gas feedstocks which can be processed by all three LNG trains. In particular, this increase in flexibility will provide for gas being produced in association with oil, most of which is currently being flared.

The total supply of additional gas feedstocks will be provided by the Upstream Oil and Gas Joint Ventures operated by the Shell Petroleum Development Company of Nigeria Limited and Nigerian Agip Oil Company Limited. The Nigerian National Petroleum Corporation is the major partner in both these Joint Ventures. Other partners are Elf Petroleum Nigeria Limited and Phillips Oil Company of Nigeria.

The expansion project provides the basis for the commercialisation of the extensive gas reserves in Nigeria and also the mechanism for an enormous reduction in the level of gas flaring, realising a major environmental benefit. It also provides the opportunity for the development of new oil reserves, both offshore and onshore, with immediate utilisation of the associated gas.

Revenues and surpluses from the base project will be reinvested in the expansion project. The remaining funding has been provided by NLNG's shareholders – Nigeria National Petroleum Corporation, Shell Gas B.V., Cleag Limited (Elf) and Agip International B.V. who have now invested additional funds of US $600 million.

Shell Gas Nigeria B.V. will continue to act as Technical Adviser to the project from the Shell office in The Hague.

In addition to the LNG, processing of the associated gas will produce over one million tonnes per annum of Liquified Petroleum Gas (LPG). The markets for these products are expected to be South America and Western Europe.

Additional LNG shipping capacity will be required. The tender exercise for the acquisition of two new build vessels is well advanced.

In developing the project, particular emphasis has been paid to ensuring that Nigerian and local manpower, suppliers or materials and equipment, and contractors have the full opportunity to participate and contribute to this project. Nigerianisation, technology transfer and community relations have all been specifically addressed in the detailed project plan.