About one million tons out of 5.64 million tons of the gas to be exported to South Korea annually, under a long-term Liquefied Natural Gas (LNG) supply agreement, which the country entered last week with energy giants, Royal Dutch Shell and Total, would come from Nigeria.
Shell and Total hold 25.6 percent and 15 percent equities respectively in the NLNG. Other shareholders are the Nigerian National Petroleum Corporation (NNPC) (49 per cent) and Italian oil giant Eni (10.4 per cent). The Plant, located in Bonny Island, Rivers State has an overall capacity of 22 million tons of LNG yearly and 4 million tonnes of Liquefied Petroleum Gas (LPG), otherwise known as cooking gas. The gas that would be provided by Shell from Nigeria's LNG plant beginning from 2013 will increase to 2.0 million tons in 2014.
The deal worth $84 billion will see State-run Korea Gas Corp (KOGAS), world's largest corporate buyer of LNG after Japan importing a combined 5.64 million tons per annum (mtpa) of LNG from 2013 to 2035.The volume is equivalent to about a fifth of the country's LNG imports in 2010.
South Korean officials said the deal, worth about N90 trillion ($84.1 billion) won over their lifetime is the nation's largest ever long-term gas supply agreements.
Asia's largest economies are competing for Australia's rapidly growing supplies of LNG to secure the energy to fuel expansion.
The massive LNG deal is expected to replace a number of long-term supply contracts with Indonesia, Malaysia and Brunei under agreements covering around 4.7 million tons per year, due to expire between 2013 and 2015.
KOGAS, the world's largest corporate buyer of LNG, will also acquire a 10 percent stake with an additional investment of $1.5 billion in Shell's fully-owned Prelude project in Australia, the ministry said.
The country's economy ministry said the agreement with Shell and Total would help "stabilise its LNG supplies as global energy supply concerns have been on the rise since Japan's March earthquake.
South Korea's LNG demand is expected to remain relatively flat through the next decade, inching up to 34 million tonnes by 2024, up from 32 million in 2010, according to government estimates.
The NLNG currently operates six production trains. However shareholders in the project also plan to build Train 7, as part of government’s efforts to ensure that revenue from gas equals that of oil. The six-train currently produces about 3.4 million mtpa of liquefied petroleum gas, all of which was previously exported to the United States (US market).
NLNG officials disclosed recently that government would earn around $1 billion/year in revenue from gas exports if a seventh train comes on stream.