BG Group commenced business development activities in Nigeria in mid- 2004. Nigeria offers the potential for an excellent strategic fit with BG Group’s gas chain capability and Atlantic Basin position in light of its hydrocarbon potential.

Key dates

2006
PSC signed for OPL 332
Contracted LNG deliveries from Nigeria LNG Trains 4/5 began
MoU to buy LNG from Brass LNG
Olokola LNG (OKLNG) Joint Venture Project Development Agreement (PDA) Awarded licence OPL 286-DO

2007
SPA signed for Nigeria LNG Train 7
PSC and associated Downstream MoU signed for OPL 286-DO
OKLNG Shareholders’ Agreement (SHA) signed

In January 2006, BG Group signed a PSC for Block OPL 332 with the Nigerian National Petroleum Corporation (NNPC), which resulted in BG Group acquiring a 45% participating interest in, and operatorship of, the deep water block. The PSC followed a farm-in agreement with Sahara Energy Exploration and Production Limited (Sahara), which now retains a 35% participating interest. Other partners with participating interests in OPL 332 are the Nigeria Petroleum Development Company with 10%, and Seven Energy Nigeria Limited with 10%.

OPL 332 is located in up to 1 000 metres of water. The first phase of the two-part work programme on OPL 332 began in 2006. Acquisition of 3D seismic on the Block was completed in January 2007 and data processing was completed in January 2008 with the drilling of an exploration well targeted for 2009/10.

In March 2007, BG Group signed a PSC and associated downstream MoU for Block OPL 286-DO with NNPC. BG Group, together with Sahara, was awarded licence OPL 286-DO in the May 2006 Nigerian Oil Block Mini-licensing round. OPL 286-DO is located in deep water (200 – 1 000 metres) close to the giant Bonga field, offshore the western Niger Delta. BG Group is the operator with a 66% participating interest, along with partners Sahara (24%) and Equinox Exploration Limited (10%). OPL 286-DO contains an existing discovery, Boi. Exploration and appraisal drilling is expected to commence in 2008 and continue into 2009.

BG Group continues to evaluate further upstream opportunities in Nigeria.

BG Group and its partners are developing OKLNG, a liquefaction plant at Olokola, on the south-western coast of Nigeria. In March 2007, the SHA was signed between NNPC, Shell, Chevron and BG Group, which includes the development of the launch project and any future expansions, and sets out the governance within the project company and the Shareholders’ rights to supply gas and offtake LNG.

In April 2007, a groundbreaking ceremony led by the President of Nigeria took place at the site in Ogun State at which the Free Trade Zone agreement was signed. The OKLNG launch project is two trains, each with a capacity of 6.3 mtpa of LNG, and expandable in the future to a multi-train natural gas liquefaction facility and marine terminal. Additional technical work is being done to optimise the final design. BG Group has a 14.25% share in the project. All shareholders will have the right to lift their equity share of LNG.

In 2006, BG Group announced a MoU with Brass LNG for the acquisition of LNG. Volumes are expected to be 1.67 mtpa LNG. The proposed agreement will be for 20 years. These purchases complement the earlier signing of a 20 year SPA for 2.3 mtpa LNG from Nigeria LNG Trains 4 and 5 located on Bonny Island. Deliveries under this agreement commenced in January 2006.

In February 2007, BG Group signed a SPA with Nigeria LNG for the acquisition of 2.25 mtpa of LNG for a 20 year term that will be produced by Nigeria LNG’s proposed Train 7 project in Finima, Bonny Island.