Gas supply projects delay ExxonMobil, Chevron, Totals’ power plants

*Gas flaring.

*Gas flaring.

21 June 2016, Lagos — The delay in the construction of the multibillion-dollar upstream gas supply projects to feed Chevron’s Agura Power Plant, ExxonMobil’s Qua Iboe Power Plant and Total’s Obite Power Plant has delayed the projects, which were conceived by the administration of former President Olusegun Obasanjo as part of the efforts to monetize Nigeria’s gas resources, reduce flaring and boost electricity generation.

Investigation revealed that out of the five power plants Obasanjo’s administration had planned to be constructed by the joint venture companies between the Nigerian National Petroleum Corporation, NNPC, and the international oil companies, IOCs, only Shell’s Afam VI Power Plant in Rivers State and the Nigerian Agip Oil Company, NAOC’s, Okpai Power Plant in Delta State were constructed.

Country Chair of Shell Companies in Nigeria and Managing Director of Shell Petroleum Development Company, SPDC, Mr. Osagie Okunbor told journalists in Lagos at the weekend that Afam VI power plant contributed 14 per cent of Nigeria’s grid-connected electricity in 2015, “consolidating its achievements since first power in August 2008.”

“The Afam VI Power Plant is supplied by the SPDC-operated Okoloma Gas Plant, which also supplies gas directly to the domestic market in the eastern part of the country,” said Shell’s briefing notes launched by Okunbor.

It was, however, gathered that apart from the Afam VI and 480MW-capacity Agip’s Okpai power plants, the three other IOCs have not been able to complete their power plants due to non-availability of upstream projects to supply gas feedstock to the plants.

It was also learnt that while ExxonMobil and Total have made committed but slow progress in the implementation of their own projects, Chevron’s project has been stalled on account of gas supply constraints.

Chevron had unveiled plans to build, own and operate a 400-500MW Combined Cycle gas-fired power plant at Agura, near Ikorodu town in close proximity to the existing Egbin Power Station.

According to a source familiar with the project, the company was said to have given contractors February 28, 2008 deadline to respond to submissions for pre-qualification for the design and construction of gas pipeline/processing facility.

In addition, such companies were also required to demonstrate the capability to tender for the Engineering Design, Procurement, and Construction Contract in respect of the work package.

By Chevron’s target, the power plant was required to provide power to the national power grid commencing in fourth quarter of 2011 with all individual gas turbine units commissioned for open cycle operation by the second quarter of 2011.

But an investigation revealed that after the much-celebrated ground-breaking by former President Obasanjo, no physical construction took place at the project site.

“The project was stalled because there was no gas to feed the plant when completed. Even if the gas pipelines were hooked to Egbin, there was no gas to feed both Egbin and the new project,” said the source.

Also since the ground-breaking ceremony at ExxonMobil’s Qua Iboe Terminal in Ibeno Local Government Area of Akwa Ibom State, was performed in 2010 by the then Group Managing Director of the NNPC, Dr. Mohammed Sanusi Barkindo, and the then Deputy Governor of Akwa Ibom State, Mr. Patrick Ekpotu, construction work at the 500 megawatt power plant has been very slow.

Mobil Producing Nigeria had awarded the Front End Engineering Design, FEED, contract for the project in September 2009.

In the case of the Obite Power Plant under Total’s Oil Mining Lease (OML) 58, Total’s obligation is to provide gas for the 400 megawatt-capacity plant and not to build the power plant.
*Ejiofor Alike – Thisday

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