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Addax Petroleum Announces Federal Government Approval Of Nigeria Gas
Utilization Initiative
Addax Petroleum Corporation together with its partners Chrome Oil Services
Limited and Korea Gas Corporation, announced that it has received the
approval from the Federal Government of Nigeria, for its proposed
implementation of an integrated gas utilization project in Nigeria. Addax
Petroleum has also entered into a heads of agreement with Chrome and KOGAS,
South Korea’s national gas company, forming an international consortium
which, upon finalization of the necessary project development agreements,
will take responsibility for the development of this integrated gas
utilization project in response to the Nigerian Government’s current gas
marketing master plan.
Commenting, the Honourable Minister of State for Energy, Gas, Emmanuel
Olatunde Odusina, said: “We are very pleased that Addax Petroleum, Chrome
and KOGAS have initiated this project in conjunction with our country’s
Policy Direction for Gas and Gas Master Plan. This is a significant step
forward in the development of Nigeria’s substantial gas resources and its
continuing economic development. The combination of domestic and
international interests in the Consortium together with the involvement of
the Bayelsa State Government also signifies the confidence of the respective
communities in our plan and the bright future of Nigeria.”
Commenting, Jean Claude Gandur, President and Chief Executive Officer of
Addax Petroleum said: "We are extremely proud to be an early participant in
Nigeria’s Gas Master Plan and to have received the approval of the Federal
Government. This is an important milestone for Addax Petroleum in the
development of the considerable gas resources in our license areas in
Nigeria. We believe that the strong relationship between Addax Petroleum,
Chrome and KOGAS brings together the vital and complementary international
and domestic expertise required for our consortium to play a significant
role in realizing Nigeria’s gas plans. Additionally, we believe this
proposed project will provide significant benefits to Nigeria and its people
by way of power generation, employment creation and substantial foreign
direct investment.”
In early 2008, the Federal Government of Nigeria launched a Gas Master Plan
through which it is seeking to unlock the country’s massive gas potential
for the accelerated economic development of Nigeria. The principle
underlying the government’s Policy Direction for Gas is to competitively
position Nigerian gas in terms of cost competitiveness and scalability of
capacity. The Policy is focused on an integrated infrastructure strategy to
support domestic, regional and export LNG markets while attracting new
players into the Nigerian gas value chain and ensuring commerciality for all
investments. Today, Nigeria reportedly contains proved gas reserves of
approximately 182 Tcf, ranking it seventh in the world. Through the Gas
Master Plan, the Nigerian government is encouraging the beginning of
dedicated gas exploration, and has stated that Nigeria has the potential to
increase gas reserves to as much as 600 Tcf which would establish it as the
fourth largest in the world.
The integrated gas utilization project proposed by the Consortium and
approved by the Federal Government is intended to include the exploration
and development of gas fields in Nigeria, including the Corporation’s
OML137, to secure the gas reserves necessary to commercialize a new LNG
production facility of up to 10 million tones per annum to be sited on
Brass Island in Bayelsa State , to provide domestic power generation
capacity of up to 1,000 megawatts and to provide feedstock for the
development of petrochemical facilities.
As part of the Federal Government approval, the Consortium has been
instructed to cooperate with the Nigerian Ministry of State for Energy
(Gas), the Department of Petroleum Resources and the Nigerian National
Petroleum Corporation to establish fiscal and commercial terms for the
upstream and downstream activities that meet the required investment levels
for all participants in the project. The Corporation believes that these
negotiations will take place rapidly and can be concluded in a timely
fashion to achieve final investment decision by the end of 2009.
As at December 31, 2007, Netherland, Sewell & Associates estimates the
Corporation’s best estimate contingent gas resources in Nigeria to be
2,414.8 Bcf and associated liquids to be 77.2 MMbbl. Contingent gas
resources reported are limited to the Corporation’s producing license areas
in the shallow water and onshore license areas of Nigeria only. These gas
resources are discovered but are categorized as contingent because the
commerciality of the gas resources and the terms by which the Corporation
can produce the gas resources are yet to be established.
