Chevron’s N315.9 billion EGTL on track as Agbami comes on stream

The cost of the EGTL which was initially scheduled to come on stream at the end of 2010 was reviewed from $1.7 billion to $2.7 billion. The upward review of the original cost of the project after the signing of the contract agreement generated controversy which analysts say contributed to the delay.

The project, when completed will have the capacity to process about 300,000 cubic feet a day of gas into 34,000 barrels a day of GTL diesel.

The EGTL plant which the company jointly owns with the Nigerian National Petroleum Corporation (NNPC) will when completed have the double effect of reducing gas flare and producing low-sulfur diesel fuels for international markets.

The company is already sponsoring 200 Nigerians who will run the plant on a 26-month education and training course at Sasol plants in Sasolburg and Secunda, South Africa.

Moshiri also said the cost of Agbami offshore oilfield which will start pumping oil in the next few weeks compares favourably with the prevailing cost in the industry.

The Chevron boss said if the cost of Agbami is compared to the cost of starting a similar new project, the deepwater oilfield will score considerably high in terms of being economical.

He maintained that it would be difficult to build another Agbami today with that capital expenditure.

The 800 million barrels reserve capacity oil field located about 70 kilometres offshore is expected to reach its peak output of 250,000 barrels per day within a year of start up scheduled for July 21, 2008.

Chevron is the operator of Agbami, while Brazil’s state-owned oil company, Petrobras, has a 20 percent participating interest from which it expects a share of 30,000 barrels per day. When it comes on stream, the deepwater oil field will set a new world standard in deepwater production.

Gas-to-liquid plants convert natural gas, which otherwise would be flared, from its gaseous condition to liquid. The liquid is broken down to carbon monoxide and oxygen and re-combined to form low-sulphur diesel, or even crude oil.

This process, according to Okwudili Obi, managing director of Gas Distribution Services Limited, provided the energy needs of apartheid South Africa, when the country was cut off from energy supply from the rest of the world.

The country extracted gas from coal and broke it down into other components, which were re-combined to produce crude oil for the country’s refineries.

Chevron had embarked on the GTL project in the country with the collaboration of Sasol of South Africa.

The project will have the double effect of reducing gas flare and producing low-sulfur diesel fuels for international markets.

Obi also said the GTL project will provide high-calibre employment to Nigerians who will operate the plants. Austin Avuru, managing director of Platform Petroleum Limited said the establishment of GTL industry in the country has a high propensity of multiplier effects which will impact on a good number of people.

He said contractors and suppliers would have jobs to do, adding that they would also employ different skills which could create jobs.

The GTL industry offers an attractive choice to nations with economically stranded natural gas reserves because it allows them to diversify in the use of their resources. Diversification would allow the country to gain higher rates of return than through a singular investment strategy.

The giant Agbami floating production, storage and offloading (FPSO) vessel arrived at the field in May, but Chevron imposed a news blackout due to security fears.

The company was afraid that Niger Delta militants might try to attack the billion-dollar equipment.

The South Korea-built FPSO is one of the largest of its type in the world. It can store 2.2 million barrels of oil in its hull and is designed to pump 250,000 barrels per day from the Agbami field. Agbami holds reserves pegged at about one billion barrels of oil.

A strike action by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), is however threatening the start up date of the project.