Shell Pens Nigerian Gas Distribution Deal
Shell has reached a 20-year deal with Nigerian Gas Marketing Corp to distribute gas to industrial customers in Nigeria's Lagos and Ogun states, its local unit reported on January 17.
Shell Nigeria Gas (SNG), a leading gas distributor in Nigeria, will also extend its network to Badagry to serve the border community, the company reported, saying the deal would help the country use more of its domestic gas supply. The country is one of the world's biggest flarers of associated gas.
Shell's country chair Osagie Okunbor said increased gas distribution would bring about "tremendous benefits to the economy.... Shell companies in Nigeria will continue to turn Nigeria’s domestic gas opportunities into reality through our strategic intent to develop enough gas to meet our current commitments and future growth plans," he said.
SNG signed a memorandum with Oyo state in October last year on developing a master plan for increased gas distribution in the country. The company says it has over 150 industrial and commercial customers in Nigeria, mostly in the Ogun, Abia, Oyo, Rivers, Bayelsa and Lagos states. While expanding downstream, it recently scaled back its upstream activities in the country, offloading its interest in the OML 17 onshore block to local investor Heirs Holdings for $533mn.
Nigeria is Africa's biggest crude producer. But the focus is shifting to gas, with the country estimated to have nearly 200 trillion ft3 (5.4 trillion m3) of proven gas reserves. Nigeria is set to expand its LNG exports to 30mn metric tons/year after, the international Nigeria LNG consortium involving Shell approved building a seventh export train in December 2019. However, the government also wants to increase gas use in household heating and cooking, vehicle transport and petrochemicals, among other areas.