Business 10,000 jobs threatened as Shell, Chevron withdraw from OKLNG

Discussion in 'Business News' started by jeff juwana, Aug 29, 2013. Views count: 1322

  1. jeff juwana

    jeff juwana Moderator

    The unemployment rate in Nigeria is set to rise further as Chevron Nigeria Limited and Shell announced their withdrawal from the Olokola Liquefied Natural Gas Project, OKLNG, thus putting the fate of about 10,000 workers on the line.

    The companies underpinned their reason for withdrawal to include lack of commitment from the Federal Government to pursue the completion of the project, the non-passage of the petroleum bill, PIB. However, Shell’s withdrawal still remains a doubt as they are yet to confirm their pull out. Likewise, the word is mum at Nigerian National Petroleum Corporation, NNPC, the principal partner in the project, which had been informed on the oil majors decisions, and had over the years had seconded a lot of its staff to the OKLNG project.

    However, after almost a month of taken the decision, Chevron, in a statement signed by its General Manager, Policy, Government & Public Affairs, Mr. Deji Haastrup, said that the company effectively pulled out of the project on July 31, 2013, adding that efforts over the last eight years to mature the project have not resulted in a final investment decision, FID.

    Chevron originally had 19.5 per cent equity in the project, but this increased to 22.74 per cent after the withdrawal of BG from the project.

    The Olokola LNG project was originally designed to consist of a marine berth for offloading LNG, along with four LNG trains each with a 5.5 Million Tonnes Per Annum (MTPA) capacity.

    The first phase of the construction was designed to complete two of the trains, and the second expected to complete the other two — resulting in a 22 mtpa capacity.

    The OKLNG project was initiated in 2005, with the Nigerian National Petroleum Corporation, NNPC, as the major shareholders, with 46.75 per cent stake, BG — 14.25 per cent, Chevron — 19.5 per cent and Shell — 19.5 per cent.
    BG pulled out from the project in 2009, following which Chevron increased its stake to 22.74 per cent.

    The Memorandum of Understanding, MoU and shareholders’ agreement for the company were signed by parties in 2005 and 2007 respectively, Final Investment Decision was billed for 2007, production and first shipment of LNG from OKLNG was scheduled to commence in 2009, while phase 2 of the project was scheduled to conclude in 2010.

    A source at OKLNG said the project, which is the most cost-effective LNG project in Nigeria, if allowed to come on stream, would have served as a major contributor to Nigeria’s economy development.

    According to the source, a number of projects already undertaken at the site, risk being abandoned, such as the pioneer camp among others.

    The source said, “The project was going ahead of schedule, all of a sudden, funding ceased.”
    The source noted that the plan of the project was for gas producers/owners to send natural gas to the facility where it would be converted to LNG for a fee and pumped into owner ships for sale.

    The source said the frustration and eventual pulling out of the oil majors from the project stems from the fact that many years after the memorandum of understanding (MoU) was signed, nothing concrete has been recorded.
    “Presently, all the expatriates have left; the only people remaining are NNPC’s staff on secondment to the company and a few contract staff,” the source said.

    The OKLNG project has among its benefits; capacity building in local community for ongoing business relationship with OKLNG; generate about two million tonnes per annum of Liquefied Petroleum Gas, LPG, close to the Lagos market, minimize NNPC funding requirements and improve Nigeria’s global LNG position and revenue from gas exports, among others.

    The OKLNG has been mired in controversies since the project was initiated under former President Olusegun Obasanjo’s regime. Niger Delta militants, under the aegis of Joint Revolutionary Council, had in 2006, threatened to sabotage the OKLNG, if its FID was taken ahead of the Brass LNG project. The Joint Revolutionary Council was made up of the Dokubo Asari-led Niger Delta Peoples Volunteer Force (NDPVF), Movement for the Emancipation of the Niger Delta (MEND), and the Martyrs Brigade.

    The groups had called for the cancellation of the OKLNG project and the termination of the MoU, or face the “fiercest showdown” yet by their forces. The group issued threats at the foreign oil companies involved in the project, Chevron and Shell, as well as Nigeria’s state-owned firm NNPC. The group also said that it would punish Nigerian’s who “collaborate” on the project.

    The militants said that they would stop at nothing to make sure the project fails.

    They said, “Let us state in very clear terms, that we will destroy this project. We will sabotage the pipelines. We will ambush and attack its workers. We will take hostages. We will sabotage the project’s logistics and vandalizes every facility we set our eyes on.

    In a statement signed by Cynthia Whyte, the Group said, “We will like to state in very clear terms that Shell and Chevron will not go unpunished. For more than 40 years, our people have been subject to the worst levels of environmental degradation and despoliation. We have borne acid rains and have stomached putrid water.

    Farmlands have been destroyed. Seas have been polluted. Vegetations have been devastated. Yet the infidel partnership of NNPC, Shell, and Chevron still seek to short change our people and deprive them of that which should be given them.

    “If the LNG plant will be built in Olokola, then let them get their gas from Olokola or its environs, Any pipeline from any of our communities would be destroyed, site workers found aiding and abetting the laying of pipes will be taken hostage or taken out. Every shipment with facilities meant for Olokola project will be destroyed.”

    According to him, the government is in a battle with the management of OK LNG over its establishment on the Free Trade Zone, adding, however, that it is 100 per cent in support of the project.

    The first shipment of LNG from Olokola LNG was expected in 2009 (Phase 1). while the Phase 2 was scheduled for 2010. But none of these came to pass as the FID on the project was never taken.