Power Woes to Worsen

No Comments » November 28th, 2008 posted by // Categories: Energy Development Project





Power Woes to Worsen

•Shell shuts Soku Gas Plant •NLNG declares force
From Ahamefula Ogbu in Port Harcourt, Patrick Ugeh in Awka and Alike Ejiofor in Lagos, 11.28.2008


Nigeria’s power generation problems may worsen following the shutting down of a major gas facility belonging to Anglo Dutch giant, Shell Petroleum Development Company (SPDC), at Soku, the country’s oil and gas nerve center.
Power generation has already dropped by over 800 megawatts owing to inadequate gas supply to Egbin and Sapele Power Stations.
Also, Nigeria’s gas export and domestic supply yesterday suffered major setbacks as Nigeria Liquefied Natural Gas Ltd (NLNG), supplier of around 10 per cent of the world’s LNG, declared force majeure on gas delivery to its customers.
This action came after Shell shut down its Soku Gas Plant to repair pipelines damaged by vandals and also declared force majeure on gas supply to NLNG.
Shell’s Soku Gas Plant supplies 40 per cent of NLNG’s gas requirements.
The declaration of force majeure enables companies to miss contractual obligations to their customers without incurring any legal liabilities due to circumstances beyond their control.
SPDC spokesman Precious Okolobo said in a statement that the temporary shut down of the Soku Gas Plant in Rivers State was to enable the company carry out urgently needed repairs resulting from damage caused by a significant increase in condensate theft from the plant’s pipelines.
“SPDC has declared force majeure on gas supplies to Nigeria Liquefied Natural Gas Limited (NLNG) for the duration of the shut down,” he said.
“In recent months the number of illegal connections on pipelines has increased significantly and they are encroaching on the Soku plant itself, increasing safety risks to an unacceptable level. To ensure the safety and security of staff, contractor staff and communities, urgent repair work must be carried out immediately on the pipelines outside of the perimeter of the plant. To do this safely, the plant must be shut down. SPDC will also clean up nearby environmental damage caused by condensate spilled in these illegal operations,” Okolobo added.
In a reaction to this development, SPDC Managing Director, Mr. Mutiu Sunmonu, said the company’s first responsibility was for the health and safety of its staff and neighbours.
“The level of theft from this pipeline has meant we had to remove more than 50 illegal valves in August and September alone. Over the last few weeks the situation has deteriorated rapidly and resulted in a situation where safety concerns dictated we had to shut in. We also approached a stage where we have questions regarding the integrity of the pipeline which we will check,” Sunmonu said.
Following the shut down of the Shell’s gas plant, General Manager, External Relations of NLNG, Siene Allwell-Brown, said in a statement that the liquefied natural gas giant had also notified its customers that it would be unable to meet all its obligations due to the impact of the shut down of the gas plant by Shell.
“Following the declaration of a force majeure by Shell Petroleum Development Company (SPDC), Nigeria LNG Limited has similarly notified its buyers that it will be unable to meet all its obligations because of the impact of the shut down of the SPDC’s Soku Gas Plant which contributes 40 per cent of NLNGs feed stock. NLNG is committed to making the optimum use of the available feed gas it receives from other suppliers,” she said.
The declaration of force majeure by NLNG will also worsen the supply of Liquefied Petroleum Gas (LPG), otherwise known as cooking gas to the domestic market.
NLNG is committed to making available 150,000 metric tonnes of LPG to the local market this year.
Through the intervention of the NLNG in the supply of cooking gas, the price of 2.5 kilogramme cylinder of the commodity was crashed from N10, 000 at the beginning of this year, to around N2,700 as at last week.
Explaining the current epileptic power supply, the Management of PHCN said in a statement that the recent increase in load shedding nationwide is due to the disruption of gas supply to Egbin and Sapele power stations.
“As a result of this gas supply limitation, we are losing about 800 mw generation capacity from the national grid as Sapele Power Station is completely shutdown while Egbin is running at reduced capacity,” the statement said.
 “Consequently, we have no alternative than to adhere strictly to the nationwide 12-hourly zonal power rotational rationing to maintain system stability and ensure even distribution of the limited generation output from the functioning plants,” the statement added.
Nigeria’s gas export will also suffer setbacks as NLNG’s Bonny Island plant, the third world’s largest, supplies gas to mostly European customers including Gas Natural of Spain, BOTAS of Turkey, Gaz de France and TRANSGAS of Portugal, with the biggest being the Italian electric power giant ENEL, which agreed to buy 3.5 billion cubic metres (bcm) per year of LNG for over 22 years.
The company is jointly owned by the Nigerian National Petroleum Corporation (NNPC) (49 per cent), Shell (25.6 per cent), Total LNG Nigeria Limited (15 per cent) and Italy’s Eni (10.4 per cent).
The company runs five LNG production lines, the fifth of which was started in February 2006 while the sixth was scheduled to start up last year.
With the completion of Train 6, the NLNG Plant has an overall capacity of some 22 million tonnes of LNG yearly and 4 million tonnes of Liquefied Petroleum Gas (LPG), otherwise known as cooking gas.
THISDAY also gathered that the plant will utilise about 3.5 billion cubic feet per day (bcf/d) feedgas intake at full production.
It was also gathered that Shell, ConocoPhilips and ExxonMobil are among the companies that supply gas to the plant.
Shareholders in the project also plan to build Train 7 that will lift the total production capacity to over 30 million tonnes per annum (MTPA) LNG by 2011, as part of the efforts by the government to ensure that revenue from gas equals that of oil.
Meanwhile, the regulatory agency in the power sector, Nigerian Electricity Regulatory Commission (NERC) has spoken out on the adverse effects of the stoppage of the National Independent Power Project (NIPP), saying it does not augur well for the development of the sector.
Fielding questions yesterday at the pioneer power consumer assembly held in Awka, the Anambra State capital, NERC Chairman Ransome Owan explained that the stoppage of the project would not only stall the availability of power to all sections of the country but would eventually lead to more costs being incurred to complete the power plants under construction.
Represented by Mallam Abdulrahman Ado, Vice-Chairman of the commission, Owan also decried the wholesale condemnation of NIPP contractors by the House of Representatives’ probe panel without taking cognisance of those who had done well.


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