GE Power Scores with Long Term Supply Agreement as Nigeria LNG Expands Capacity

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). The natural gas liquefaction plants of Nigeria LNG Limited (NLNG) (Lagos, Nigeria) on Bonny Island Nigeria will become the world's third largest LNG plant when trains 4 and 5, which are currently under construction, are completed in late 2005. If the proposed NLNGSix Project is completed, which involves a sixth train, the plant will have an overall production capacity of 22 million tons per annum and 2.7 million tons of LPG. Details of the construction schedule and completion date of the sixth train, which will add four million tons of LNG and 0.5 million tons of LPG per annum, have yet to be finalized. The plant will have the capacity to meet 13 percent of the world's LNG requirements, when trains four and five are completed this year.

In the first week of August, NLNG signed a long-term sale and purchase agreement (SPA) with Endesa (MADRID:ELE) (Madrid, Spain) for the delivery of one BCM/year to Endesa's terminals in Huelva and Cartagena in Spain. The agreement is subject to a final investment decision for NLNGSix by the company's shareholders.

Nigeria NLNG's deputy managing director, Alhaji Ibrahim Dahiru Waziri said that the agreement with Endesa in the first in the series of SPAs being executed for the sixth train's LNG volumes and underscores the strategy of diversifying its customer portfolio.

Earlier in the year, NLNG had signed an understanding with BG LNG Services (BGLS) for the supply of 2.5 million tons per annum of LNG for a period of twenty years to the Lake Charles terminal in Louisiana. This supply will start in 2006. In the meantime BGLS will take excess volume from trains 1, 2, and 3, which are not taken up by long terms buyers. The Nigerian company will be responsible for shipping the LNG to Lake Charles where BG has 80% of capacity rights until September 2005 and 100% thereafter until 2024.

GE Power Systems is well placed to benefit from the continuing expansion plans of NLNG having just signed a 28-year contractual service agreement (CSA) to provide maintenance and other services to NLNG for as many as 22 GE gas turbines and 18 GE compressors at the Bonny Island plant.

The contract includes a future option for train six, in addition to extending an existing agreement for compression trains one and two from the original six years to 28 years. Train three, which recently completed start-up and is entering commercial operation, is also included in the agreement, as are trains four and five due to complete construction by the end of this year. Eight Frame 6B gas turbines being used for power generation and thee Frame 6Bs and seven Frame 7Es operating in mechanical drive mode are being supplied by GE Power Systems to trains 1 to 5. Also included under the CSA are nine compressors provided by GE and six units provided by other manufacturers. Train six, if it is built, could add four gas turbines and three compressors to the total number of units to be supplied under the CSA.

Parts, repairs and services will be supplied by GE for all the planned and unplanned outage work for all the turbines and compressors during the length of the agreement.

Nigeria LNG is a joint venture company with shareholders: Nigerian National Petroleum Corporation 49%, Shell Gas BV 25.6%(LSE:SHL) (London, UK), TotalFinaElf Nigeria 15% (NYSE:TOT) (Paris, France) and Agip/ENI International 10.4% (Rome, Italy).