Lagniappe

 

Global Insight :
Brass LNG decision imminent in Nigeria

 

Brass LNG Investment Decision Imminent in Nigeria; ENI will appoint a managing director to Brass LNG as the project awaits its final investment decision.

Global Insight Perspective


Significance

Martin Hutchison from ConocoPhillips has stepped down as managing director of the Brass LNG project amid Nigerian newspaper reports that he was sacked

Implications

The reason given for the change of managing director is due to an activation of the rotational clause the shareholders signed in 2003 and the need to bring in a new person as the project moves from the engineering phase to the project-execution phase.

Outlook

ENI will appoint a new managing director for the project by 15 November at which point it is hoped the Brass LNG project will finally be given its final investment approval.

ENI to Appoint Managing Director in November

The US$8.5-billion Brass LNG facility located in Bayelsa state in Nigeria's oil and gas producing Niger Delta region is set to receive its final investment decision (FID) imminently, according to domestic newspaper reports. However, before the FID is officially announced the project is to have a new managing director. These developments are from the Brass LNG project meeting, which took place over two days in London last week, have been reported in local newspaper ThisDay. The Brass LNG project is a joint venture between Eni, ConocoPhillips, Total, and the Nigerian National Petroleum Corp. (NNPC).

Martin Hutchison from ConocoPhillips will step down as managing director of the project and the role will be taken by a representative of Eni from 15 November. Early reports suggest that Hutchison was sacked and that the Nigerians were unhappy with his performance, especially his unexplained failure to turn up to the ground-breaking ceremony of Brass LNG, which was attended by Nigeria's former president Olusegun Obasanjo two weeks before he left office.

Chairman of the company's board, Dr Jackson Gaius-Obaseki, told ThisDay: "We activated a provision of the rotational headship in the shareholders' agreement. The ConocoPhillips and its nominee, who has been managing director of the company, have done very well in the achievement of milestone-1. The next phase is technical and its technological requirement is very heavy. ConocoPhillips being the licensor, the decision is that ConocoPhillips should be allowed to man the technical aspect of the project as will be required in the next phase, while another shareholder takes care of the administration or management of the firm. And the obvious choice became Eni since [it is] on ground".

This will see a new position created—general manager, Brass Facilities—which will be held by ConocoPhillips. Each partner will be assigned roles with Total responsible for overseeing the company's commercial ventures, while the NNPC is to take over responsibility for human resources administration and external relations.

Outlook and Implications

Global Insight expects the FID to be announced in the very near future, and there were expectations that the investment decision could have been announced during the London meeting. With a new managing director set to take charge of the Brass LNG project next month, the FID could also be announced too. As the project moves from the engineering phase to the project execution phase, Eni's considerable experience in the Niger Delta and the fact that the firm is expected to supply 50% of the gas production for the plant, makes it the right leader for the project.

The three foreign companies each have a 17% stake in the facility, while NNPC holds a 49% share. Phillips Brass Ltd will represent ConocoPhillips; Brass Holdings is an affiliate of Total; and the first LNG cargo is expected to be exported in 2011. The group had reached purchase agreements with six buyers covering the entire production of the two LNG trains at the plant; all cargoes are set for the Atlantic Basin market. Bechtel, the U.S. engineering and construction firm, has been awarded the contract for the Brass LNG project. Bechtel was previously awarded the front-end engineering and design (FEED) contract and will now build the main gas units itself and sub-contract other work.

By Thomas Pearmain an energy analyst for Global Insight International.
(Thomas.pearmain@globalinsight.com). Global Insight's Energy Group provides independent, comprehensive analysis, forecasts, data, and of the worldwide energy marketsplace. Petroleumworld does not necessarily share these views.

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Petroleumworld News 10/09/07

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