South African petrochemicals giant Sasol said on Wednesday it would sell its indirect interest in the Escravos gas-to-liquids (EGTL) plant in Nigeria to Chevron for an undisclosed sum.
The world’s top manufacturer of motor fuel from coal said it would continue to support Chevron in the performance of the EGTL plant through ongoing catalyst supply, technology and technical assistance.
The company said other sale processes, including its interests in the Republic of Mozambique Pipeline Investment Company pipeline and Central Termica de Ressano Garcia gas-fired power plant in Mozambique, are well underway.
In March, Sasol had accelerated its asset disposal programme and said that it could sell up to $2 billion of its shares to ensure that it can pay its debt following a slump in oil prices and fears over the coronavirus outbreak.
The project was 76% complete by June 2011. The Escravos site is located about 100km south-east of the Nigerian capital Lagos. The plant receives gas from Chevron-operated Escravos Gas Plant (EGP).
Escravos gas-to-liquids (EGTL) plant design and development
“Sasol Chevron is providing the project with the leading technologies of the two companies, Sasol’s proprietary Fischer-Tropsch technology and Chevron’s Isocracking technology.”
With EGTL as the first project using its technology and technical expertise, Sasol Chevron (a joint venture between Sasol and Chevron) worked on the design and development of EGTL and is providing management, operating and technical services to the project owners. Sasol Chevron will also market products from EGTL.
The $8.4bn EGTL project is an integral part of the owner’s overall gas use strategy which includes domestic natural gas sales, regional natural gas sales through the West Africa Gas Pipeline (WAGP) and international sales of GTL products.
The initial estimated cost of the project was revised twice and reached $5.9bn from an initial $1.7bn. New estimates say the project will now cost $8.4bn. Due to the delays and increases in costs, the project is now expected to be completed in 2012 and will be operational in 2013.
The GTL plant converts natural gas into premium environmentally friendly fuel, diesel and GTL naphtha products. Europe is the primary market for all fuel products from the Nigerian plant, although some products are sold in the USA.
Although the project is situated in a politically sensitive area, both Chevron and Sasol are confident about bringing the project to fruition by 2012.
Sasol and Chevron sent 200 Nigerians to South Africa on a 26-month training course at Sasol’s plants in Secunda and Sasolburg.
Sasol Chevron’s Fischer-Tropsch and Isocracking technologies
Sasol Chevron provided the project with the leading technologies of the two companies, Sasol’s proprietary Fischer-Tropsch technology and Chevron’s proprietary Isocracking technology.
Sasol is a recognised leader in state-of-the-art Fischer-Tropsch technology and has been actively involved in developing technology for more than 50 years. The Isocracking process is used to upgrade waxy syncrude to yield a lighter premium-grade fuel which contains no sulphur or aromatics.
Conversion of natural gas to diesel at the Nigerian Escravos GTL facility
The Escravos GTL project converts more than 325 million cubic feet of natural gas a day to GTL diesel and GTL naphtha. The GTL plant is located adjacent to the CNL Escravos Gas Plant – phase I (EGP-1).
This plant processes about 150 million cubic feet of gas each day and produces LPG for sales to international markets and pipeline quality gas for domestic uses.
The EGP-1 project, which cost $550m, was completed in 1997. EGP-2 came on-stream in 2003 and phase 3A was completed in 2009. The EGP project is currently in phase 3B of expansion. It is expected to be operational in 2013.
Feasibility studies for CNL and NNPC’s EGTL project
A pre-feasibility study in April 1998 started the ball rolling for the EGTL project; this was followed by a more in-depth engineering feasibility study to confirm the design configuration and economics.
After the successful completion of the feasibility study, EGTL entered with front-end engineering and design (FEED) in July 2001. This was completed in 2002. The project was executed under a lump-sum engineering, procurement and construction contracting strategy and first production is expected in 2013.
The environmental impact and socio-economic assessments were completed and project-critical path site preparation activities commenced in early 2002.
EPC contracts awarded to African and international companies
In April 2005 the NNPC awarded the contract for the EGTL project to a consortium consisting of JGC of Japan, Kellogg, Brown and Root (KBR) of the USA and Snamprogetti of Italy.
“The Escravos site is located about 100km south-east of the Nigerian capital Lagos. The plant will receive gas from Chevron-operated Escravos Gas Plant (EGP).”
The GTL plant is designed to process GTL products like low-sulphur GTL diesel, GTL naphtha and liquefied petroleum gas (LPG), thus eliminating the high incidence of gas flaring in Chevron Texaco’s area of operation.
Another key area of the contract involved the construction of a mini refinery, used for fuelling boats, helicopters, fixed-wing aircraft, drilling rigs and onshore/offshore facilities.
The mini refinery also services floating petroleum filling stations to be introduced in the Niger Delta region. Julius Berger Nigeria completed construction of the initial six floating stations under a contract received in 2005.
Acergy secured a $500m contract for gas development plan of the project in October 2009. The contract includes engineering, fabrication, procurement, transportation, installation, tie-in and commissioning of the plant. It covered the procurement and installation of pipelines of about 130km length and assembly, along with the installation of 15 risers.
The contract also included the installation of three subsea tie-ins and 40 crossings.