Gas flare persists as Sasol delays project, pushes up cost to N702 billion
29 July, 2008 02:00:00 EJIOFOR ALIKE
businessdayonline.com
Government’s effort to end gas flaring in the country has suffered a set-back as Sasol of South Africa said yesterday that it was reviewing the Escravos Gas-To-liquid (GTL) project, with prospects of a delay in its completion and increase in cost.
Sasol, the world’s top producer of liquids from gas, said costs are likely to increase to $6 billion (N702 billion) and the completion date delayed to 2011 from a previous start-up date of 2010.
The plant, located near Warri, about 100 kilometres southeast of Lagos, will when completed have the capacity to process about 300,000 cubic feet a day of gas into 34,000 barrels a day of GTL diesel and GTL naphtha.
This, according to analysts, will help boost government’s efforts to end gas flaring in the country.
The project will have the double effect of reducing gas flare and producing low-sulfur diesel fuels for international markets.
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.
Chevron had earlier said the $2.7 billon (N315.9 billion) project was on tract to meet the new start up date, even as the company said the project was still economical after the first upward review of the cost.
Ali Moshiri, president of Chevron, Africa and Latin America Exploration and Production, hinted at the World Petroleum Congress in Madrid, Spain, that having recorded significant progress towards its completion, the joint venture project would start up in 2011.
Efforts to speak with Femi Odumagbo, Chevron’s manager in charge of public and governmental affairs, proved abortive as he failed to pick his calls.
However, a Chevron source said the review of cost was due to the "escalation of prices of materials due to global energy prices".
He said Nigerians do not obey contract clauses, adding that there is too much bottleneck in contract implementation in the country.
Okwudili Obi, managing director of Gas Distribution Services Limited, said gas-to-liquid plants convert natural gas, which otherwise would be flared, from its gaseous condition to liquid.
Reacting to the upward review of the cost and the delay in its completion, Obi said it would hamper government’s efforts in ending gas flaring.
"It is not good for us; GTL will play a vital role in gas flare reduction," he said.
The gas when converted into liquid is further broken down to carbon monoxide and oxygen and re-combined to form low-sulphur diesel, or even crude oil.
Obi said the process provided the energy need of apartheid South Africa, when the country was cut off from energy supply from the rest of the world.
According to him, 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 in with collaboration of Sasol of South Africa.
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 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.
Chevron 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. |
