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Nigeria Senate Probes Chevronís $10b Gas Project

Source: Bloomberg 6/7/2016, Location: Africa

A Nigerian Senate committee has asked Chevron Nigeria Ltd. to explain why a gas-to-liquids joint venture with the state-run petroleum company cost about three times more to complete than initially estimated.

The $10.3 billion invested in the Escravos facility was ďastronomical,Ē given it was supposed to be built for a cost of about $3 billion, Gas Committee Chairman Bassey Akpan said Tuesday at a meeting in the capital, Abuja. The JV contract terms may have been violated because partner Nigerian National Petroleum Corp. wasnít consulted on running over budget, Akpan said.

Isabel Ordonez, a Houston-based Chevron spokeswoman, declined to comment when contacted by e-mail.

Monday Ovuede, the director of the NNPC and Chevron Nigeria joint venture, said Chevron had acted in a ďreasonable and prudent mannerĒ carrying out the project. NNPC officials failed to attend several meetings and decisions had to be made to go ahead, Ovuede told the committee.

The 33,000 barrels per day Escravos gas-to-liquids plant began production in mid-2014, churning out mainly synthetic diesel, according to Chevronís website. The plant supplies clean-burning, low-sulfur diesel fuel for cars and trucks, it says.

Sasol Ltd., the worldís biggest producer of fuel from coal, which had a 27.5 percent stake in the venture, sold its holding to Chevron in 2008 after the projectís cost more than doubled.

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