Nigeria’s Senate Committee on Gas is investigating allegations that Chevron Nigeria illegally inflated the price of the Escravos gas-to-liquid (EG TL) project, from the initial estimate of US$2.9 billion to US$10.3 billion. The committee has opened an investigation and has demanded to see all records of the contract from the company.

The EGTL project was a planned twin of a development in Qatar, Oryx GTL, which cost about US$1 billion. Work on EGTL began in 2005 and encountered numerous delays. Its second train finally started up in April 2015.

Last week, authorities queried Chevron Nigeria on the alleged decision to increase spending on the GTL plant without approval from its partner, the Nigerian National Petroleum Corp. (NNPC). The committee also criticised the US-based company for the cost overruns, declaring that it had deliberately violated the terms of the joint venture agreement.

There seemed to some confusion over NNPC’s role in EGTL.

The state-backed company had submitted to the panel that it was no longer part of the project. However, a Chevron Nigeria representative told the session that NNPC had not pulled out of the deal and had actually been paid US$35 million from the project’s proceeds.

The committee also asked Chevron Nigeria to explain why the EGTL project cost had escalated so far beyond the initial estimate.

In particular, it noted the difference in prices between Qatar’s Oryx project and the Escravos project, with both having 34,000 barrels per day of nominal capacity.

EGTL began production in mid-2014. The plant supplies clean-burning, low sulphur diesel from the conversion of 9.2 million cubic metres per day of gas. South Africa’s Sasol was also involved in the project but reduced its stake, in 2008, from 37.5% to 10%, following the project’s price increase.

Initially, there had been plans to expand EGTL to 120,000 bpd capacity within 10 years of its construction. A 2015 update from Sasol described the project as “both trying and rewarding”. The project site is remote and challenging, requiring substantial investments to enable equipment to be delivered. This is unlike the Oryx site, which is in the Ras Laffan industrial city.

The investigation comes at a difficult time for Chevron, with the company’s infrastructure repeatedly attacked by the Niger Delta Avengers (NDA). In late May, the Escravos tank farm main electricity feed pipeline was blown up by the militant group. Earlier in the month, the NDA had attacked the Okan platform offshore facility.