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Nigeria to develop gas-based downstream industries

Honeywell and USTDA to help Nigeria gas monetization

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolThe US automation and technology company Honeywell Group (Honeywell) and the United States Trade and Development Agency (USTDA) signed an agreement to jointly finance a feasibility study to develop gas-based downstream industries in Nigeria.

In Africa, Nigeria is the largest owner of proven reserves of natural gas estimated to 182 trillion cubic feet (tcf) on January 2013.

With these reserves, Nigeria is ranked on the ninth position in the world while it appears only in 25th position by the production of gas with 1.2 tcf recorded in 2012.

Nigeria_Honeywell-USTDA_Petrochemical-Complex_MapThis gap between the production and reserves of natural gas highlight the potential opportunities to increase this production significantly.

With the second crude oil reserves in Africa, Nigeria saw most of the associated gas just being flared as too expensive for gathering, treatment and transportation.

This flared gas represented the equivalent of $18.3 million losses in revenues per day in addition to the carbon footprint impact.

In 2008 Nigeria put in place a Gas Master Plan with incentives and penalties system to prevent and stop natural gas flaring and encourage its monetization.

Because of the lack of infrastructures and industries, Nigeria consumes less than 20% of its production.

The other 80% of the natural gas production are exported under the form of liquefied natural gas (LNG).

At current and foreseeable gas market prices, the total costs to develop gas fields or collect associated gas for export through LNG plants becomes a challenge requiring alternative solutions.

In addition the production and export of crude oil and LNG plants generate minimum local employment despite a drastic local content regulation.  

Honeywell and USTDA plan $3 billion chemical complex

In this context, the development of the petrochemical industries appears as the most attractive solution for Honeywell and USTDA.

The disadvantage of the depressed gas prices on the export markets turns into a competitive advantage when natural gas may be used as feedstock for downstream applications.

Nigeria_Honeywell-USTDA_Petrochemical-ComplexIn addition each $billion of capital expenditure invested in the petrochemical sector generates four times more employment than the same $billion spent in exploration and production.

If the development of a petrochemical industry in Nigeria is recognized as a very promising scenario it supposes to find the technology partners to provide the required proprietary licences and the know-how to design build and operate such complex facilities.

That is where the partnership between Honeywell and USTDA comes as the cornerstone of this gas monetization program.

To be developed in phases, Honeywell and USTDA will team up to carry out the technical and commercial feasibility study of a $3 billion capital expenditure petrochemical complex in Nigeria.

After showing that Nigeria is able to support the design, construction and operation of this first petrochemical project, Honeywell and USTDA will go for a world-scale petrochemical complex in order to optimize the local value extracted from the gas production.  

For more information and data about oil and gas and petrochemical projects go to Project Smart Explorer

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