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NNPC and TotalEnergies to Invest $550 Million in Gas Projects

The Nigerian National Petroleum Corporation (NNPC) Limited, in collaboration with the French energy giant TotalEnergies, is set to invest a substantial $550 million in the development of gas facilities in the oil-rich Rivers State. Sources within NNPC informed Reuters on Wednesday that the agreement signifies a strategic partnership between the national oil company and the international oil major.

An NNPC source indicated that an official announcement regarding the deal is expected this week.

According to Reuters, the investment will include the establishment of a gas processing plant and the construction of an extensive pipeline network across the Niger Delta region. This initiative aims to bolster the region’s energy infrastructure, ensuring efficient processing and transportation of natural gas.

The gas processing facility will be constructed at the Ubeta onshore gas field, which is jointly owned by TotalEnergies and NNPC. This facility will supply gas to the Nigeria Liquefied Natural Gas (NLNG) plant. NLNG is a consortium comprising NNPC, Shell, TotalEnergies, and Italy’s Eni. Once completed, the plant is anticipated to produce 350 million standard cubic feet of gas per day and 10,000 barrels per day of associated liquids, according to the source.

Implications for Nigeria’s Gas Sector

  • Nigeria, with Africa’s largest natural gas reserves of over 200 trillion cubic feet, has historically flared excess gas from its oil fields due to insufficient processing infrastructure and capital constraints.

  • The recent investment in gas processing infrastructure represents a pivotal shift, highlighting the potential for more effective utilization of Nigeria’s extensive natural gas resources and reducing the wasteful practice of flaring.

  • Analysts suggest that this investment could be a testament to President Bola Tinubu’s efforts to attract investment into Nigeria’s energy sector. The administration has been actively fostering a more investor-friendly environment.

  • Successful implementation of these investments could transform Nigeria’s energy landscape, positioning the country as a key player in the global natural gas market while addressing environmental concerns associated with gas flaring.

“The government hopes this will not only instill confidence in the quality of Nigeria’s resource base but also in its commitment to improving the ease of doing business,” said Clementine Wallop, Director of Sub-Saharan Africa at political risk consultancy Horizon Engage.

Investment in Gas: A Strategic Shift

The transition from oil to gas in Nigeria’s energy sector has been ongoing for decades, driven by the country’s substantial gas reserves compared to its crude oil reserves.

  • President Tinubu has further solidified this shift with the signing of new executive orders aimed at bolstering the gas industry in the country.

  • Additionally, President Tinubu inaugurated three gas plants, targeting a 25% increase in gas production. These plants are located in Delta and Imo states.

  • NNPC recently signed a deal with North American firm Golar LNG to establish a floating Liquefied Natural Gas (LNG) facility in the Niger Delta region. This agreement includes a Project Development Agreement (PDA) to utilize approximately 400-500 million standard cubic feet per day of gas, producing LNG, LPG (cooking gas), and condensate.

  • NNPC spokesperson Olufemi Soneye stated that while the initial project development agreement was concluded by both NNPC and Golar, the final agreement is expected to be completed before the fourth quarter of this year.
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