Abuja and Lagos — The $6 billion (about N930 billion) Olokola Liquefied Natural Gas (OKLNG) project is at the verge of collapsing as the last partner in the project, Chevron Nigeria Limited (CNL) announced its withdrawal yesterday.
OKLNG project was conceived in 2007 by NNPC, BG, Chevron and Shell. BG and Shell withdrew from the project in June 2012 and July 2013 respectively. With the withdrawal of Chevron which was the project leader, NNPC remained the only partner in the project.
The OKLNG is targeting the processing of one billion cubic feet of gas per day to produce 12.6 million tonnes per year of LNG, one million tonnes per year of LPG, and up to 100,000 barrels per day of condensate and gas for local power generation.
But some analysts said the project at conception had more of political than the economic benefits which now necessitate the withdrawal of the major partners.
Efforts to speak with NNPC officials on the new development yesterday proved abortive as phone of the public affairs top officials were not responding.
Chevron said that the withdrawal took effect from July 31, 2013 in a statement it issued yesterday, adding that NNPC was duly informed of Chevron's decision to withdraw and the divestment process is being managed in accordance with the provisions of the shareholders' agreement governing the project.
Managing Director of the company in Nigeria Andrew Fawthrop, explained that Chevron's decision was informed by the fact that efforts over the last eight years to mature the project have not resulted in a final investment decision.
"The business decision to withdraw from OKLNG is based on a review of our investment portfolio, the lack of progress on the project and a reprioritization of resources to focus on growing domestic gas supply," he explained in a statement signed by Deji Haastrup, General Manager, Government and Public Affairs.
Daily Trust learnt that the three investors, Shell, Chevron and BG were not only key in the investment in the project but were proposed to be the major suppliers of the gas to the plant if the project will remain successful.
The OKLNG company is located at a border town between Ogun and Ondo states.
Some companies in 2012, such as Centrica, an integrated energy company, LNG Japan and Mittal Group, indicated interests in joining the board of OKLNG project.
Haastrup said Chevron remains fully committed to Nigeria and continues to pursue its investments in the country's oil and gas industry.