| Add RSS Feed

Oil & Gas Journal

Maureen Lorenzetti
Washington Editor

The international gas business today looks like the oil business did 50 years ago. And this is especially true in Africa, where multinational companies are still in the early stages of building the links between gas reserves and customers, according to George Kirkland, president of ChevronTexaco Overseas Petroleum (CTOP), the arm of ChevronTexaco Corp. that handles upstream operations outside North America.
"For years, Africa's natural gas has been a resource looking for a market. Now this gas is becoming a bonus."

Kirkland told a Corporate Council on Africa Houston investment conference in November that ChevronTexaco and its partners will invest more than $20 billion over the next 5 years in the region.
"The benefits of natural gas go beyond new jobs and capital. Natural gas offers Africa environmental gains, greater industrial diversity, more prospects for regional cooperation, and new trading opportunities and relationships with the rest of the world," he said.
Developing the gas will take time, and "there will be growing pains along the way," he said. "But the potential economic, environmental, and social gains will make the struggle worth it."

Africa key target
Kirkland said the continent is a key investment center for the company now and for the long term.
"We invest looking 20, 30, even 60 years down the road; it's a long-term relationship," he said.
CTOP's new capital expenditure program for 2004 will include "significant" spending to build up its international natural gas resource base; Nigeria and Angola will figure prominently. Ongoing investment is slated for existing nearshore producing fields, in the Sanha condensate project, and in deepwater developments at Agbami and Benguela-Belize.
Much of the offshore gas will be converted to LNG and exported. Nigeria, whose gas reserves are largely located offshore, now has the world's fastest growing LNG business, Kirkland said.
By 2006, Nigeria's Bonney LNG project, with its six processing trains, will place Nigeria third among the world's LNG exporters, he noted.

And demand for natural gas is spurring other projects in Africa. These include transregional pipelines to what ChevronTexaco describes as the world's first commercial-scale, fuels-only, gas-to-liquids (GTL) plant. The Escravos GTL plant, a joint venture with the Nigerian National Petroleum Corp., will produce ultraclean diesel fuels from Nigerian natural gas that otherwise would be flared.

ChevronTexaco is also joint venturing with South African-based energy and petrochemical group Sasol Ltd, to provide technology and operational expertise to the project. Sasol is providing risk-based financing representing one-half of the project costs.

The company is also eyeing an investment in a $550 million proposed West Africa Gas Pipeline that would ship formerly flared Nigerian gas more than 600 miles to Ghana, Togo, and Benin. As potential gas suppliers for the pipeline, ChevronTexaco and Royal Dutch/Shell Group are urging the World Bank to give Ghana financial guarantees to reduce commercial risk. Gas from the pipeline would supply new and renovated power plants in the region.
Kirkland declined to predict when or if the World Bank will offer the kind of financial backing that helped seal the deal for rival ExxonMobil Corp. to proceed with the Chad-Cameroon oil project. But he said that discussions are "ongoing."
The bank is under increasing pressure from environmental advocacy groups to favor gas instead of oil projects because they are seen as more environmentally friendly. But as yet there is no official policy from the bank or its funders to reject oil-based development.