Abuja (Platts)--24Mar2011/228 pm EDT/1828 GMT

Nigerian President Goodluck Jonathan Thursday unveiled foreign investments amounting to billions of dollars in the country's gas sector as part of its much-vaunted plan to harness more of its abundant gas resources.

In total, Nigeria's plans to increase supply and use of gas in the country are expected to involve total investment of some $25 billion, Jonathon said as he disclosed details of the projects involved at a ceremony in Abuja.

One of the key projects in the scheme involves Italy's Eni and Nigerian energy company Oando, which have agreed to invest $3 billion on a gas processing plant in the Niger Delta, he said.

The gas plant is to be built in Obiaruku in southern Delta state and is due to be completed in 2012.

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Nigeria hopes to end completely the current widespread practice of flaring associated gas produced at the country's oil fields and to raise domestic gas supply to over 10 Bcf/d by 2020, up from the current level of 1 Bcf/d.

Nigeria has long touted its plans to stop wasting its gas riches, but previous deadlines for oil companies to end gas flaring have all been missed, with the multinational companies that produce the bulk of the oil blaming Nigeria's poor funding of its share of joint venture projects as well as security challenges in the Niger Delta.

The foreign oil companies have previously proposed 2013 as a more realistic date for eliminating gas flaring.

Thursday's announcement by Jonathan differed from previous government gas initiatives, however, because of some of the specific details it contained. As well as the Eni/Oando gas processing plant, the president said Nigeria had also signed an agreement with Saudi Arabia's Xenel Industries to build a petrochemical plant in the Niger Delta with production capacity of about 1.3 million mt/year.

"[The projects] mark the beginning of [Nigeria's] journey into the league of nations which have successfully leveraged...their abundant natural gas to positively impact the lives of their citizens," Jonathan said.

"It is our expectation that by 2013, we would have positioned Nigeria as the regional hub for gas based industries of fertilizers, petrochemicals and methanol," the president said.

FERTILIZER PLANT

India's Nagarjuna Fertilizers and Chemical Ltd. is expected to team up with US-based Chevron to build a fertilizer plant in Nigeria that will use a substantial volume of the country's huge gas resources, he said.

"This agenda is expected to bring an end to gas flaring as we hope to monetize this," he said.

Jonathan commended the investors from Saudi Arabia, India, Italy and the US for buying into the Nigerian "gas revolution."

"Your decision to invest in Nigeria testifies to the confidence you have in our vision and faith you have in our country," he said. "Your commitment will no doubt serve as a challenge to other investors elsewhere, letting them know that Nigeria is indeed open and ready for business," he said.

Nigeria has proven gas reserves estimated at 187 Tcf and further undiscovered potential of about 600 Tcf, Jonathon said.

According to BP's statistical review of world energy, Nigeria's gas reserves amounted to 185.4 Tcf at the end of 2009, the biggest in Africa. The country's production of 24.9 billion cubic meters, however, was well short of both Algeria (81.4 Bcm) and Egypt (62.7 Bcm).

Nigeria launched a gas master plan in 2008, under which oil companies are required to make available a certain percentage of their gas production to the domestic market for electricity generation and fertilizer plants.

Jonathan said the government expected that full implementation of the gas master plan would create more than 500,000 new jobs.

In 2009, Nigeria shortlisted 15 firms including Russia's Gazprom, E.ON Ruhrgas of Germany and Shell, to build three major gas processing facilities. Also speaking at the event, Nigeria's oil minister Diezani Alison-Madueke said that in order to grow the gas the country's gas potential, the government was looking to tap the hydrocarbon potential of other inland basins in addition to reserves in the Niger Delta and offshore fields.

Nigeria she added, would spend $1 billion on oil exploration campaigns in the Chad, Gongola/Yola, Sokoto and Anambra basins, as well as the Benue Trough over the next five years.

The government expected the projects unveiled Thursday to result in direct foreign investment of more than $10 billion between 2012 and 2014, the minister said.

--Staff reports, newsdesk@platts.com