Nigeria's Gas Plan Promises 10 Petrochemical and Fertilizer Plants by 2014

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Written by Richard Finlayson, Senior International Editor for Industrial Info--As Nigerian president Goodluck Jonathan officially launched $10 billion of gas development and industrial investment plans, the state-owned Nigerian National Petroleum Corporation (NNPC) signed memoranda of understanding with international companies to advance plans for petrochemical and fertilizer plants that are to be constructed and commissioned during 2014.

In 2009, the government chose 15 international companies to take part in the development plans, which have yet to be rolled out in full. Last week, Diezani Allison-Madueke, the Minister of Petroleum Resources, told the media that the gas plan would use more than 10 billion standard cubic feet of gas per day, up from the current 1 billion, to feed 10 new petrochemical and fertilizer plants, which could trigger an agricultural revolution in Nigeria and create 500,000 jobs. The range of new plants would cover a major petrochemical plant, two fertilizer plants, five fertilizer-blending plants, a methanol plant and an LNG plant. The 1.3 million-ton-per-year petrochemical plant is expected to create 200,000 direct and indirect jobs.

Xenel Corporation (Saudi Arabia) and Nagarunja Fertilizers and Chemicals (NFCL) (Hyderabad, India) have signed agreements for a petrochemical facility in Delta State and two fertilizer factories in Lagos, the country's commercial capital. The Nagarunja fertilizer plants' product will be distributed to local and export markets. The $600 million Lagos ammonia plant will produce 730,000 tons of ammonia per year, and the $850 million Lagos Urea Unit will produce 1.25 million tons per year.

The minister said that the reindustrialization of the country would extract the full economic value from the country's estimated gas reserve resources of 187 trillion standard cubic feet. She said that $3 billion would be invested in the development of gas pipelines over the next five years. The gas utilization plan also would mitigate the negative environmental effects of oil well flare off.

An investment of $2 billion will be made in a critical pipeline that will expand the current infrastructure, and spur lines will be constructed from new supply centers. The gas supply quota for the power industry currently exceeds requirements by 150 million standard cubic feet per day and could be used to fast-track 500 megawatts (MW) of additional power generation. A further 2.5 billion standard cubic feet of gas would feed more additional power by 2014, and a feed of about 10 billion standard cubic feet would target 40,000 MW by 2020.

The development plan has been launched a fortnight before the presidential elections, a fact that has not been missed by the public or politicians. The launch follows a weekend of chronic fuel scarcity in Lagos, to which the minister responded by saying that deregulation of the oil industry was the only solution to the recurring fuel crises. It will take sustained political will from the government to bring deregulation in against the opposition of interests that are vested in the status quo. Promises have been made before, but this time the detailed gas project initiative may give the country's oil and power industries the impetus to break free of chronic under performance and control a bottomless pit of investments. For more information, see March 7, 2011, article - Nigeria's Oil and Gas Industry Bill Could Create $680 Billion in Revenues.

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