$10Bn chevron escravos gtl produces first liquids – business (4) – nigeria gas key bolt carrier

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atlwireles: Nigeria has joined a small group of nations including Qatar, South Africa, Malaysia and Australia that operate hi-tech Gas to Liquid (GTL) plants, as the Chevron owned Escravos GTL has produced its first liquids, after being behind schedule for several years.

“We recently achieved a major milestone at our Escravos gas to liquids plant with the production of GTL diesel and naphtha. We anticipate continued ramp-up in first product lifting later this year,” said George Kirkland, Vice Chairman and Executive Vice President-Upstream and Gas, at Chevron Corp., during the company’s Q2 Earnings conference call.

Global GTL production has the potential to deliver the equivalent of 32 billion barrels of liquids, or about a year’s worth of global oil demand, Bernstein analysts wrote in a November report titled “What if Small-Scale Gas to Liquids Was the Next Shale Gas? Are We on the Verge Of Another Energy Revolution?”

http://businessdayonline.com/2014/08/10bn-chevron-escravos-gtl-produces-first-liquids Its been long this has been waited for,its here at last……i v been so happy since i heared this. A boost for the economy though Re: $10bn Chevron Escravos GTL Produces First Liquids by 735i( m): 10:47am On Aug 28, 2014

I am guessing that based on your comments that you don’t have a fundamental knowledge of how businesses operate. There is something called risk and reward. what that means is that If you are going to bear the risk of something then the reward have to be able to compensate for it.

For example, exploration and production could be considered risks because you could explore and not find anything thereby losing all your money. So you do a risk reward analysis to find out if the potential reward you could get from that oil field is going to be big enough to offset your cost and be enough for you to make a lot of money. In other words, are the benefits or profits going to be worth it.

NNPC (the company that claims to represent Nigerians) doesn’t really bear any risk that I know of they just show up when you find oil or any natural resources and demand a share. Yet this same companies still have to pay taxes on the money they make (or so i think). What a horrible practice.

At times I feel bad for foreign investors who come to do business in Nigeria because of what they have to go through. I mean the cost of doing business is so bad then you have all the other unnecessary wahala that you have to go through. Chei!!! No wonder a lot of investors find it really risky to invest in Nigeria and even Africa as a whole.

Reinvestment of revenue from the operations….Chevron will have a higher say on what happens with the revenue from Operations…(This is why Shell can get away with massive environmental pollution because the investment laws it signed off with Nigeria in the ’60’s allows it to)

4. Profit is not all about money, think of the jobs this opened up- direct and indirect. At at time during construction, there were over 4000 personnel on side at any given time (even running on "shift" . The "egg supplier" made sure he supplied 10000 eggs per day!

I didn’t put a figure to my several years for the simple fact that there are many unknowns at this point. A major unknown is the OPEX, the project just made it through start up and beneficial operations is still pretty much ahead. Ultimately, the OPEX will be higher than for crude oil production. With kick off debt of over $10Bn, the break-even point is better imagined.

– The condensate is not up to 500,000 per month at full production (actually stands at less than 200,000 per month as of now). Despite the higher prices, 34,000bbl is insignificant when compared with crude oil making GTL less attractive for the IOCs in Nigeria.

– The IOCs prefer paying taxes on flared gas than processing the gas (Chevron pays 40% of the tax compared with 60% paid by NNPC), this is one of the reasons investments in gas projects have been very slow (recall that Chevron pulled out of Olokola). And government threat to shut down oil production due to flaring has remain an empty threat.

– Actually, more oil wells are not being opened up for the EGTL; attention is on using the NAG wells whose production is more than prolific. There has been no increase in crude oil production. Yes, it is true that more gas as available to NGC but NGC is limited in what can be taken, then Shell also supplies NGC so there is some sort of oversupply. The clean, excess dry gas is flared since there is no use for it by anybody

– For the IOCs, profit is seriously all about money; nobody would care about employment if it will not add to the bottom line. The shareholders back in the US do not care about the number of people on the payroll, it is about the financial statement. Actual figure during construction was about 6,000; and the new millionaires included not just the egg suppliers but also those that offered very mundane services.

Again, the high number of personnel required for the construction is one of the reasons Uduaghan had to protect the project from being stalled. The bulk of those workers were former militants and boys that worked for them, there wouldn’t have been peace in Warri if those boys were not engaged for the long years the construction took.