Nigeria – part two:

Published January 17th, 2001 - 02:00 GMT

Nigeria, an Organization of Petroleum Exporting Countries (OPEC) member, is one of the world's largest oil exporters. Nigeria is a major oil supplier to Western Europe and was the 6th largest supplier of crude oil to the United States in 1999.  

Note: information contained in this report is the best available as of July 2000 and is subject to change.  

 

Refining and Downstream : 

Nigeria's four refineries have a combined nameplate capacity of 438,750 bbl/d, but problems including sabotage, fire, poor management and lack of turn-around maintenance (TAM) sharply decrease actual output. Refinery problems have led to massive fuel shortages throughout Nigeria.  

 

In early 2000, Nigeria's main refineries (Port Harcourt I and II, Warri, and Kaduna) were running at only 35 percent of capacity. TAM on the Port Harcourt refineries began in May 2000 and is being accelerated for rapid completion. 

 

TAM on the Warri refinery was expected to begin as soon as the Nigerian government decided on a bidder for the contract. The Kaduna TAM is finished and the refinery is up and running.  

 

The IMF has recommended the deregulation of the domestic sale of petroleum products in Nigeria. In June 2000, a government decision to increase the price of gasoline by 50% prompted a general strike throughout the country and a return to gas subsidies. Petrochem and Engen reportedly have submitted bids for Nigeria's National Oil and Chemical Marketing Company (NOLCHEM), which is slated for privatization.  

 

NATURAL GAS:  

Nigeria has an estimated 124 trillion cubic feet (Tcf) of proven natural gas reserves (10th largest in the world). Associated gas production is concentrated on approximately 150 fields located onshore and in swampy areas of the Niger River Delta.  

 

Only about 30 percent of Nigeria's gas reserves are located offshore. Due to a lack of gas utilization infrastructure, Nigeria flares 75 percent of the gas it produces and re-injects 12 percent to enhance oil recovery.  

 

In May 2000, representatives of the major oil companies operating in Nigeria announced that they would be able to meet Nigeria's required phase-out of associated gas flaring by the following dates: Chevron, 2008; TotalFinaElf, 2008; Shell, 2008; Texaco, 2005/6; Agip, 2005; and ExxonMobil, 2004. Due to minimal domestic demand, most of Nigeria's gas production is aimed at European markets and the West Africa sub-region.  

 

Nigeria's most ambitious gas project, the $3.8-billion LNG (liquefied natural gas) facility on Bonny Island was completed in September 1999. The facility is expected to process 7.15 billion cubic meters (252.4 billion cubic feet (Bcf)) of LNG annually.  

 

The consortium developing the project, Nigeria Liquefied Natural Gas Corporation (NLNG) is comprised of the NNPC (49 percent), Shell (25.6 percent), TotalFinaElf (15 percent), and Agip (10.4 percent).  

 

Initially the facility is to be supplied from dedicated gas fields, but within a few years half of the input gas is to consist of associated (currently flared) gas.  

 

Several customers have signed long-term purchase agreements with NLNG, including the Italian electric utility, ENEL (49 percent of the production volume); Spain's Enagas (22 percent);Turkey's Botas (17 percent); Gaz de France (7 percent); and Transgas of Portugal (5 percent). The first LNG deliveries to European customers began on October 9, 1999 and are scheduled to continue on pre-sold 22-year contracts.  

 

NLNG consortium members confirmed in mid-1999 that a third LNG production train with an annual capacity of 3.7 billion cubic meters (130.6 Bcf) is to be built, increasing NLNG's overall LNG processing capacity to 10.85 billion cubic meters (383 Bcf) per year.  

 

Deliveries from the third LNG train are scheduled to begin in the fourth quarter of 2002 and are intended to supply European markets. NLNG announced that Enagas had signed a 21-year agreement to purchase over 70 percent of the third LNG train's output. Transgas signed an agreement in June 1999 to purchase an additional 1 billion cubic meters (35.3 Bcf) per year of LNG from the third train.  

 

With this agreement, NLNG has pre-sold all output from the third LNG train. When the third train is operational, it will be possible to run the entire LNG facility on associated gas. NLNG also has approved feasibility studies to build a fourth and fifth liquefication train at Bonny at a later date.  

 

The Shell-owned and -operated Soku gas plant successfully completed a test-run in May 2000. The Soku gas plant is one of the major facilities that will supply feed gas to the Bonny Island LNG facility.  

 

The TotalFinaElf-operated Obite gas project already supplies gas to the NLNG plant. In April 2000, Shell was awarded a $4.2 million contract to build a natural gas pipeline in Nigeria's Ogun State.  

 

By the end of 2000, the pipeline is to begin supplying natural gas to major industrial users at Agbaro and Ota, near Lagos.  

 

The Escravos gas project (EGP), in which the NNPC holds a 60 percent share and Chevron a 40 percent share, is another project that will expand Nigeria's natural gas industry.  

 

The first phase of the EGP was completed in six years at a cost of $570 million. The EGP processes 165 million cubic feet per day (Mmcf/d) of associated gas (from the Okan and Mefa fields).  

 

Gas from the second phase of the EGP will be used to supply Benin, Togo and Ghana through the West African Gas Pipeline (WAGP). Nigeria first announced plans to build the WAGP to the three countries in 1995.  

 

The pipeline is expected to run from Escravos, through Lagos to Cotonou in Benin, Lome in Togo, and Tema, Takoradi, and Effasu in Ghana. A final decision on the route of the WAGP and the financial structure for the project will be announced before the end of 2000.  

 

The $400-million WAGP will transport 100-150 Mmcf/d of gas to Ghana, Benin and Togo beginning in 2003. Six companies -- Chevron, Shell, NNPC, Ghanaian National Petroleum Corp., Societe Beninoise de Gaz, and Societe Togolaise de Gaz -- have been named as joint developers of the WAGP.  

 

COAL: 

In 1998, Nigeria's coal production was 150,000 short tons and consumption was 160,000 short tons, from reserves of around 209 million short tons. Nigeria plans to begin exporting coal and to increase domestic consumption to over 1 million tons per year.  

 

Coal from the Okaba mines in Kogi State is committed to the domestic market, while coal from the Okpara mines in Enugu State is destined for the international market.  

 

The Obasanjo administration has divided Nigeria's coal deposits into blocks that will be sold to private companies. Previously, the Nigeria Coal Corp. (NCC) held the sole title for all coal deposits in the country. Nigeria's government is installing a new coal handling system at Port Harcourt to facilitate exports.  

 

ENERGY OVERVIEW  

Petroleum Advisor: Rilwanu Lukman 

Minister of Power and Steel: Olusegun Agagu 

Minister of Solid Minerals: Kanu Godwin Agabi 

Proven Oil Reserves (1/1/00): 22.5 billion barrels 

Oil Production (1999E): 2.1 million barrels per day (bbl/d), of which 2.0 million bbl/d is crude oil 

OPEC Crude Production Quota (beginning July 1, 2000): 2.091 million bbl/d 

Oil Consumption (1999E): 337,000 bbl/d 

Net Oil Exports (1999E): 1.8 million bbl/d 

Crude Refining Capacity (1/1/00): 438,750 bbl/d 

Major Crude Oil Customers (1998): United States, EU 

Natural Gas Reserves (1/1/00): 124 trillion cubic feet 

Natural Gas Production (1998E): 208 billion cubic feet (Bcf)  

Natural Gas Consumption (1998E): 208 Bcf 

Recoverable Coal Reserves (1998): 209 million short tons (Mmst)  

Coal Production (1998E): 0.15 Mmst  

Coal Consumption (1998E): 0.16 Mmst  

Electric Generation Capacity (1/1/98E): 5.9 gigawatts 

Electricity Generation (1998E): 14.75 billion kilowatthours (38 percent hydroelectric, 62 percentthermal)  

 

OIL AND GAS INDUSTRIES: 

Organizations: The Nigerian National Petroleum Corporation (NNPC) manages the state-owned oil industry. NNPC controls majority interests (between 55 percent -60 percent) in all joint ventures with foreign oil companies. The NNPC holds 49 percent in the Nigeria Liquefied Natural Gas (NLNG) Company. 

Major Foreign Oil Company Involvement: British Gas, British Petroleum-Amoco, Chevron, Conoco, Deminex, ENI/Agip, ExxonMobil, Pan Ocean, Royal Dutch/Shell, Statoil, Sun Oil, Tenneco, Texaco, TotalFinaElf 

Major Oil Fields: Cawthorn Channel, Edop, Ekulama, Escravos Beach, Forcados Yorki, Jones Creek, Meren, Nembe, Okan, Oso, Ubit  

Refineries (nameplate capacity bbl/d) (1/1/00): Port Harcourt-Rivers State (150,000), Warri (118,750), Kaduna (110,000), Port Harcourt-Alesa Eleme (60,000),  

Major Terminals: Bonny Island, Brass River, Escravos, Forcados, Odudu, Pennington, Qua (Kwa) Iboe  

Source:United States Energy Information Administration. 

 

© 2001 Mena Report (www.menareport.com)

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