THE WALL STREET JOURNAL: Nigeria Asks Oil Companies To Refine 50% Of Crude Locally: “State-run Nigerian National Petroleum Corp. (NNP.YY) has asked its joint venture partners to start plans to ensure half the crude oil they pump is refined locally by 2006, The Guardian newspaper reported Friday.” (ShellNews.net) Posted 1 Jan 05

DOW JONES NEWSWIRES

LAGOS -- State-run Nigerian National Petroleum Corp. (NNP.YY) has asked its joint venture partners to start plans to ensure half the crude oil they pump is refined locally by 2006, The Guardian newspaper reported Friday.

The NNPC has also signed an agreement with ChevronTexaco Corp. (CVX) for an alternative funding of joint projects valued at $164.2 million, according to The Guardian, citing Funsho Kupolokun, managing director of NNPC.

"If you are producing 100,000 barrels of a oil per day, it means 50,000 b/d must be refined in Nigeria by 2006. How you do it is left to you, you just must comply by 2006," Kupolokun told the joint venture partners.

The joint venture partners are Total SA (TOT) unit Agip, ChevronTexaco, ExxonMobil Corp. (XOM), and Royal Dutch/Shell Group (RD, SC), among others.

Production by the partners accounts for about 90% of Nigeria's total crude output, with Shell alone accounting for nearly half.

Kupolokun said the partners could refine the crude oil through Nigeria's existing four refineries, or build their own plants.

The four refineries, with installed capacity of 445,000 b/d of crude, currently meet about 50% of Nigeria's demand for refined products. The difference is met through imports.

Projects included in the funding agreement include ChevronTexaco's Meren X Platform, which cost $41 million; Meji Oil Field development at a cost of $87.6 million, and Delta South Oil Field, which is estimated to cost $35.6 million.

Kupolokun said these projects were among seven chosen by NNPC for alternative funding arrangement this year following the corporation's funding constraints.

Under the joint venture arrangement, partners contribute to project in proportion to their equity holding. NNPC, on behalf of the government, holds an average of 57% of equity in the projects.

With the agreement signed between NNPC and ChevronTexaco, the U.S. company will provide NNPC's equity funding in the three projects.

-By Vincent Nwanma, Dow Jones Newswires; +234-1-585-0849; vinwanma@beta.linkserve.com

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