Vanguard (Lagos)
NEWS
January 14, 2005 [/b]
Posted to the web January 14, 2005

By Hector Igbikiowubo
Lagos

THE Nigerian economy is expected to gross $57.4 billion (aboutN7.049 trillion) revenue within the full life cycle of the OK-Liquefied Natural Gas (LNG) project to be sited at Olokola a border town between Ondo and Ogun States. The OK-LNG project is expected to provide jobs for over 4000 people when it comes on stream in 2009.

Mr. Funso Kupolokun, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) presenting the proposed OK-LNG plan to Governor Gbenga Daniel, of Ogun State in Abeokuta, yesterday, said the estimated gross earnings were based on a conservative estimate of $26 per barrel and $4.50 HH.

The breakdown showed that during the life cycle of the project, Nigeria's 41 per cent equity will earn a net cash flow of $23.3 billion (about N3.098 trillion), while capital expenditure (Capex) is expected to gulp 17 per cent or $10 billion (about N1.33 trillion).

It is also expected that 16 per cent or $9.6 billion (about N1.277 trillion) will be taken up by operating expenditure (Opex), while ChevronTexaco and British Gas are expected to earn $14.4 billion through their 26 per cent equity interest in the project.

The NNPC boss explained that the vision driving the OK-LNG investment was to have a 30-million tons per annum (mtpa) plant, adding that the first phase coming on stream by 2009 will be a 10 mtpa capacity facility.

The Final Investment Decision is also expected to be taken between January and February next year, but the partners indicated plans to accelerate the pace of development.

Kupolokun also said there was the need to accelerate the pace of development of the project to catch a window of opportunity in the international gas market between 2008 and 2010, adding that after this period, large scale LNG projects would come on stream in Iran, Qatar and Russia.

Also speaking, Governor Daniel said he had been apprehensive when both Ondo and Ogun States commenced the development of the Olokola area- free trade zone and deep water port expected to gulp $400 million on completion. "But today I am happy we have been able to attract a $4 to $6 billion LNG project to the area."

He said his government had had fruitful discussions with promoters of the project and noted that the drawbacks experienced with communities in the Niger Delta area would not be experienced in Ogun State.