Bloomberg News

Shell Plans to Boost Nigeria Gas Production Next Year

October 21, 2011

(Updates with gas to domestic markets in fifth paragraph.)

Oct. 21 (Bloomberg) -- Royal Dutch Shell Plc, operator of Nigeria’s largest oil fields, plans to boost its natural-gas production in the country as it starts a new facility and cuts flaring, or the burning of the fuel at fields.

The Hague-based company plans to increase daily output to one billion cubic feet within a year from about 700 million, Osten Olorunsola, Shell’s vice president for gas in sub-Saharan Africa, said yesterday in an interview in Abuja, the capital.

Nigeria, holder of Africa’s largest gas reserves of more than 187 trillion cubic feet, flares most of the fuel it produces along with oil because it lacks the infrastructure to process it. Shell plans to collect gas at its Utorogu and Ughelli fields and start the Agbada non-associated gas facilities from the first quarter of 2012, Olorunsola said.

“We mop up the gas which otherwise would have been flared and we also make the gas available for power,” he said. “We’re basically using one stone to kill two birds.”

About 70 percent of Nigeria’s domestic gas demand is provided by Shell, most of which is used to generate electricity in Africa’s most populous nation. Chevron Corp., Exxon Mobil Corp., Total SA and Eni SpA are the other major suppliers of domestic gas.

Shell cut gas flaring 50 percent in the African country to about 300 million feet a day in the eight years to 2010 after installing gathering infrastructure, according to the company’s website. The gas gathering project will cost about $6 billion when completed, it said.

Shell has about 14 ongoing gas projects including the integration of the Forcados oil and gas development that will come on stream between the first quarter of next year and 2015, Olorunsola said.

Nigeria is Africa’s biggest oil producer and the fifth- biggest source of U.S. crude imports. Shell operates a joint venture in the nation where it holds a 30 percent stake and state-owned Nigerian National Petroleum Corp. owns 55 percent. Total has a 10 percent stake and Eni has 5 percent.

Top regional news: TOP AFRICA <GO>

--Editors: Rob Verdonck, Rachel Graham

To contact the reporter on this story: Elisha Bala-Gbogbo in Abuja at ebalagbogbo@bloomberg.net

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net


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