PIB: Nigeria may lose $2.5bn Russian gas investment

6 September 2011, Sweetcrude, Abuja – There are fears that Nigeria may lose a $2.5 billion project planned by the Russian gas giant, Gazprom, for the country. The Russian company is considering suspending the project over non-passage of the Petroleum Industry Bill (PIB).

Gazprom, the world’s largest gas producer, in 2008, signed a memorandum of understanding (MoU) with the Nigerian National Petroleum Corporation (NNPC) on joint venture projects, covering petroleum, gas exploration and power.

But, it announced last year that it would delay plans on the joint venture until after the passage of the PIB and general elections held are held in Nigeria this year.

Nigeria held a successful general election earlier this year, and it has been learnt that the major hurdle now to Gazprom commencing action on the joint venture with the NNPC is the delay by the National Assembly in passing the PIB.

Though NNPC and Gazprom signed the MoU on the venture in 2008, they are yet to reach final agreement on the take-off of the proposed multi-dollar business, originally scheduled to come on stream in 2015.

There are fears that the Russian company may have put the project on hold due to what sources described as “absence of clear rules”.

As planned by Gazprom, 90 per cent of the proposed investment in Nigeria would go into developing the Nigerian domestic gas production, processing and transportation.

Gazprom had stated that investing in Nigeria’s liquefied natural gas (LNG) made strategic sense as it was much closer to its main North American market than Russia.

The pipelines Gazprom had planned to build in Nigeria could eventually be used to ship gas through the Trans-Saharan Gas Pipeline, a project aimed at sending Nigerian gas through Niger and Algeria to the Mediterranean.

Nigeria boasts proven gas reserves of 187 trillion cubic feet(tcf), with about 600 tcf additional in undiscovered gas potential. It is currently the world’s seventh largest in terms of proven gas reserves, but with the estimated undiscovered potential, could easily be within the world’s top three in gas reserves. Gazprom was among the 15 oil companies selected by the Nigerian government in March last year as potential investors to help develop gas projects.

About the Author