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Govt Picks 15 Firms to Help Develop Gas Sector

18th March '09

Nigeria has chosen 15 companies, mostly from the U.S., Europe and Asia, to be core investors in the exploration and production of its natural gas reserves, the world's seventh largest, its oil minister said on Wednesday. The selected companies, which include Royal Dutch Shell, Russia's Gazprom and U.S. oil major Chevron , are expected in the next few weeks to submit proposals to the government on how they will work with state-run oil firm NNPC to develop the domestic gas sector.

Nigeria expects these firms to form consortiums that will provide an initial investment of at least $2.5 billion, eventually increasing to as much as $30 billion, a senior official with Nigeria's petroleum ministry said. "We hope to make an announcement within the next six months," the official, who did not wish to be named, said. The country has estimated natural gas reserves of 180 trillion cubic feet, but has been unable to fully exploit them due to mismanagement, a lack of funds and poor maintenance.

Nigeria invited foreign oil companies to help it build three major gas gathering plants and pipelines that would provide enough supplies to its ailing power sector. "Out of the 48 companies that applied and made expressions of interest, we did an evaluation based on the financial capacity in light of the global financial meltdown and knowhow," said Odein Ajumogobia, minister of state for petroleum. "These were the two main criteria from which we selected the 15 core investors," he told reporters in an interview.

U.S. oil major Exxon Mobil, Britain's Centrica , Norway's StatoilHydro, Germany's E.ON and India's Gail were among the selected core investors, the senior petroleum ministry official said. The remaining 33 companies that were not selected as core investors could still participate as minority stakeholders, Ajumogobia said.

Foreign investors are keen to exploit Nigeria's gas potential but are looking for more details on how they can balance the government's priority of developing its domestic infrastructure with their ambition of generating export revenue. The development of Nigeria's infrastructure could provide the framework for future export projects like the Trans-Saharan Gas pipeline, which aims to send up to 30 billion cubic metres a year of gas to Europe from Nigeria via Niger and Algeria.

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