ANGLO-DUTCH oil firm, the Shell Petroleum Development Company of Nigeria Limited (SPDC), said it required $3billion (about N462 billion) to effectively tackle complete gas flare-out from its operations in the Niger Delta region of the country.

A statement issued at the weekend by the Corporate Media Relations Manager, Tony Okonedo, said since 2000, SPDC had invested $3 billion in gas gathering projects and that additional $3 billion is required to complete them.

Shell, which is the operator of Shell/NNPC/Total/Agip joint venture, also identified inadequate funding and security challenges in the oil-producing Niger Delta as major factors delaying the implementation of the gas projects to achieve zero flare-out.

"Since 2000, SPDC has invested $3 billion in gas gathering projects; an additional $3 billion is needed to complete them. Funding and security challenges have delayed implementation of the projects."

Okonedo also announced that SPDC has taken delivery of detailed engineering design for a project that will put out gas flares in three fields in Western Niger Delta. Nigerian Technical Company (NETCO), the engineering arm of NNPC, won the contract in December 2007 for design of the Associated Gas Solution project for Otumara node, which covers Otumara, Saghara and Opuama fields.

According to him, the project involves the collection of gas from the three fields to a central processing facility at Otumara, which will treat and send it for domestic use through the Escravos-Lagos Pipeline System (ELPS).

He explained that the detailed design would form the basis for construction of the central processing facility, associated pipelines, booster stations as well as instrumentation and control.

Receiving the design package in Port Harcourt, the project manager, Toyin Olagunju, said the award of the contract to NETCO was part of a plan to improve the capability of Nigerian companies in this area of engineering. "We are pleased that the job was done in-country with Nigerian engineers gaining valuable skills and experience."

NETCO executed the detailed design with the support of their technical consultants, IMPaC, at a cost of over N900 million. Under the terms of the contract, NETCO handled the piping, civil, electrical, mechanical, corrosion and HSE/QA-QC aspects of the job from their office in Lagos, while IMPaC worked on process, instrumentation and telecommunication in Port Harcourt.

Executive Director of NETCO, Samuel Babatunde, said: "This is the first time we are handling design on a large scale for SPDC. The skills we have acquired will equip us better to serve the oil and gas industry in Nigeria."

The completion of the detailed design paves the way for construction, procurement and installation of facilities.

Meanwhile, recent policy shift on the part of the government, which gives priority to meeting local gas demand as against the present focus on the international market, has crippled most gas projects aimed a tending flare-out in the country.

To achieve the goal, the government has put on hold all gas projects designed to enhance Nigeria's export potential of the commodity.

The lid on the projects, The Guardian learnt, would last till 2014 when the government hopes to meet domestic gas need, especially for the Independent Power Projects (IPPs).

It was learnt that the initiative was part of the recommendations of the Presidential Committee on Gas Supply that government should place premium on meeting the demand of the power projects and the entire industrial sector.

The projects that are likely to be affected by the decision are the Trans-Saharan Gas Project, Floating Liquefied Natural Gas Project, the expansion of Trains 7 and 8 by the Nigerian Liquefied Natural Gas (NLNG), and the gas to liquids project, a joint venture of the NNPC and American oil giant, Chevron. The project was under internal review, due to cost variation and other issues relating to its implementation.

Officials of the venture operators and the Federal Government, who spoke on the development yesterday, explained that these projects would not be entirely jettisoned but a calculated delay would be employed in their execution to pave way for an accelerated completion of some onshore and offshore gas-gathering schemes to meet the domestic need. They also said it was a deliberate strategy to check the crisis in the energy supply need of the country.

Already, Final Investment Decision (FID) on Brass LNG and OK LNG are yet to be taken, including that of NLNG Trains 7 and 8 of the nation's premier LNG export firm.

A senior manager with one of the multinational oil firms said the government's decision was contradictory because it recently approved 12 firms to explore and produce from an estimated N198 trillion standard cubic feet gas reserve in the country.

According to the official, the only way to grow the industry is for the government to continue to invest heavily on gas export projects because the price for export deliverable makes the expansion of the gas venture worthwhile.

But an official of the NNPC said the companies that were listed for gas production were mandated to boost supply to domestic market.

The corporation's Group Managing Director, Mr. Mohammed Barkindo, had said that Train 7 of NLNG project was in the pre-FID phase and would not proceed unless the government was satisfied with both NNPC and the joint venture partners ready to meet domestic gas supply.

"Train 8 is only under consideration at this point and was also contingent on meeting the Economic Community of West African States (ECOWAS) demand, which Barkindo said, was set to rise by five billion cubic feet/day by 2013. Nigeria needs to add 1.2 bcf/day of gas supply by the end of the year," he said.

Barkindo said as a member of the Organisation of Oil Exporting Countries (OPEC), Nigeria's desire is to increase domestic utilisation of natural gas and has asked operators to commit a certain volume of their output to the domestic market.

Also at a recent gas forum, the NNPC boss explained that the corporation was considering expanding its Bonny LNG plant with the addition of a seventh and possibly an eighth train, each with a capacity of 8.5 million.

"We are exploring the possibility of expanding with a seventh and eighth train of 8.5 million mt/year each," Barkindo told an LNG session at the World National Oil Companies' Congress in Abu Dhabi, the United Arab Emirates (UAE) capital.

He said Bonny LNG plant is owned by NLNG, a joint venture of the NNPC, Shell, Eni and Total; though its trains produces 22 million mt/year and supplies about 10 per cent of the world's LNG need.

"High crude oil prices in the last few years had created "significant shift in the West African sub-region," Barkindo told the conference.

He said the shift was from a dependence on crude oil and products for power plants to gas-fired plants, and that it had created a "huge upset" in regional gas demand.