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Nigerian LNG to stay with contractor despite probe
Monday April 19, 2004 2:56 pm ET

ABUJA, April 19 (Reuters) - Nigerian Liquefied Natural Gas (NLNG) said on Monday it would give a $1 billion expansion contract to the TSKJ group despite a probe into that consortium for alleged bribery relating to an earlier contract.

A rights group has pressed European and U.S. export credit agencies to withdraw support from TSKJ after one consortium member, Halliburton Inc., said it was cooperating with a U.S. Justice Department probe into possible kickbacks of $180 million to get earlier contracts.

"There is no indication that export credit agencies are pulling support," said NLNG Managing Director Andrew Jamieson.

Jamieson said NLNG's contract with TSKJ was a lump-sum, turnkey contract which had been vetted by its shareholders and the banks financing it.

"We are perfectly satisfied that these contracts are fine. We are in negotiations with TSKJ for the carbon copy (of earlier expansion contracts) but all the peripheral stuff has been tendered," he said.

NLNG started exporting LNG from Nigeria's southern delta region to Europe and the United States in 1999. By 2008, it will become the largest private capital project in Africa with a total of $11 billion invested, according to Nigerian oil company chief Funso Kupolokun.

LNG is gas compressed through cooling to a liquid state about a tenth of its normal volume, loaded onto special tanker ships and then regasified on delivery, often to utilities that use it to generate electricity.

Jamieson said the final investment decision on the sixth expansion phase had now been delayed to the "middle of this year" from the first quarter after some problems over gas supply and construction plans.

But he was confident that the project to take output of compressed gas to 22 million tonnes by 2008 would go ahead. The gas is used as fuel for power stations.

TSKJ comprises France's Technip; Snamprogetti, a unit of Italy's Eni; Kellogg Brown and Root, a unit of U.S.-based Halliburton; and Japan's JGC Corp.

The Justice probe is the second investigation into alleged bribery by Halliburton, which was headed by U.S. Vice President Dick Cheney from 1995 to 2000.

Halliburton informed the Securities and Exchange Commission (News - Websites) last year that one of its subsidiaries made "improper payments" of $2.4 million to a Nigerian tax consultant to obtain "favourable" tax treatment.

NLNG, which is controlled by state-run Nigerian National Petroleum Corp, Royal Dutch/Shell, Eni and Total, began exporting compressed gas in 1999 and now exports 9 million tonnes a year from three phases, or trains.

Trains four and five are now under construction and due to start up in June and November next year, raising gas exports to 18 million tonnes annually, Jamieson said.

Train six would lift exports to 22 million tonnes by 2008.

High world prices for gas have meant NLNG has outstripped expectations and it announced a $569 million dividend to shareholders for 2003.

Jamieson said the sixth train would be financed by cash flow and would not require bank financing as in previous phases.