Nigeria strikes deal with Shell to supply $3.8bn methanol project

Nigeria has struck a deal for Shell to supply gas to its proposed $3.8 billion Brass methanol facility, resolving a major hurdle to a final investment decision on the project, the minister of state for gas said on Thursday.

Nigeria, which holds Africa's largest natural gas reserves of more than 200 trillion cubic feet, has struggled to tap the commodity due to capital constraints and a lack of infrastructure.

Rt. Hon. Obongemem Ekperikpe Ekpo, minister of state (Gas) petroleum resources, said in a statement that the Gas Supply and Purchase Agreement (GSPA), crucial for the Brass methanol project, will be executed next month following successful talks with Shell's Nigeria CEO and executives from other companies involved.

The GSPA will secure a long-term gas supply from a Shell-operated joint venture for the methanol production facility that will be built on Brass Island in the oil-rich coastal Bayelsa state.

"The NNPC/Shell joint venture partners are now fully committed to uninterrupted gas supply for the development of the Brass Methanol project," Ekpo said.

"The president is very passionate about this project and wants something positive to happen in respect of the Brass Methanol project before the end of May this year," Ekpo said.

The project includes a gas processing plant, a methanol production and refining site, and product export facilities.