February 25, 2011 / 12:06 AM / 8 years ago

Cost of delayed Chevron Nigeria plant now $8.4 bln

* Originally planned to open in 2010 at cost of $3 bln

* South Africa’s Sasol holds 10 pct interest in GTL plant

* Chevron says 43 pct of exploratory wells in ‘10 were dry

* Chevron details Turkey dry wells, more Angola success

By Braden Reddall

SAN FRANCISCO, Feb 24 (Reuters) - Chevron Corp (CVX.N) expects a much-delayed Nigerian plant that will convert natural gas to liquids (GTL) to cost $8.4 billion, or $2.5 billion more than its last estimate.

South Africa’s Sasol (SOLJ.J), a 10 percent owner of the GTL plant that had originally expected completion in 2010 at a cost of about $3 billion, said last May it would would not start up until 2013. [ID:nLDE644197]

The 33,000 barrel-per-day (bpd) plant, located 60 miles (100 km) southeast of Lagos, is being developed along with the Nigerian National Petroleum Corporation.

Chevron, which put the cost at $5.9 billion last year, gave the updated estimate for the plant, now 70 percent complete, in its annual report released on Thursday.

But the company remains enthusiastic about the project, which it said would allow Nigeria to perform a leading role in an advanced sector of the energy and fuel market.

“The company has continued to follow transparent and world class procedures in all stages of its implementation and the current costs reflect the state of construction costs for similar projects across the petroleum industry globally.” Chevron spokesman Scott Walker said via email.

Chevron also said in the report that it would sign an engineering deal in the second quarter for the Phase 3B expansion of the nearby Escravos Gas Plant, which would now be complete in 2013, instead of 2012 as expected last year.

The second-largest U.S. oil company also released data for 2010 showing it completed 21 exploratory wells, of which nine were unsuccessful, versus 31 in 2009 — of which 11 were dry.

An unsuccessful exploration well was drilled in the Black Sea off the coast of Turkey in November, and Chevron said future plans were under evaluation for the interest there, which it acquired last September. [ID:nN20261953]

Chevron also relinquished its 25 percent non-operated interest in the Silopi licenses in southeast Turkey, after an unsuccessful exploration well was completed in early 2010.

But in Angola, Chevron said a successful exploration well was completed late last year in the Lucapa field, and early design work on the project would start in the third quarter.

Also in the third quarter, the San Ramon, California-based company plans to drill an exploration well in the Chuandongbei area in China, where it aims to start producing natural gas in 2012, at ultimately up to 558 million cubic feet per day.

In Kazakhstan, Chevron’s 50 percent-owned Tengizchevroil affiliate plans to approve in the second half of 2011 early engineering work on a project to expand crude oil production there by 250,000 and 300,000 bpd, or nearly doubling output.

Chevron also is drilling its first shale gas well in Poland this year, and an executive told Reuters last September that blocks in Romania in the same geologic structure looked just as promising. [ID:nN21186289]

In the annual report, the company said it had just acquired a 100 percent interest in the EV-2 Barlad shale gas concession, covering 1.5 million acres in the northeast part of Romania. (Reporting by Braden Reddall; editing by Carol Bishopric)

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