London-based oil super major Shell plc SHEL, along with its partners, The Nigerian National Petroleum Corporation (NNPC),TotalEnergies and Agip, has agreed to supply gas to Brass Fertilizer & Petrochemical Co. Ltd.(BFPCL) to enable it to construct the $3.3 billion project.

SHEL’s Landmark Deal for Nigeria’s Gas Industry

The landmark deal between SHEL-NNPC Joint Venture (JV) and BFPCL for gas supply marks a major step toward Nigeria’s “Decade of Gas” initiative. This deal will pave the way for BFPCL to commence the construction of a $3.3 billion project, which will generate approximately $1.5 billion annually by exporting fertilizers, petrochemicals and other gas-based products.

Nigeria’s estimated gas reserve is approximately 200 trillion cubic feet. Per the deal, the JV will deliver 270 million cubic feet of gas per day (MMcf/d) to the Brass Fertilizer project in Bayelsa state. Nigeria’s Gas Minister highlighted the importance of the deal, accentuating its role in Nigeria's major shift away from oil dependence.

Boosting Exports and Reducing Imports

Nigeria’s Brass Fertilizer project will have a far-reaching impact on local and global economy as well. Nigeria’s gas minister highlighted that the methanol manufacturing project would boost the country’s exports to a different level and would also reduce the import of fertilizer by 30%, contributing to an annual saving of $200 million in foreign exchange for the country. The project would also contribute about $600 million to the country’s gross domestic product and create thousands of jobs for the local communities.

Per a related development, BFPCL has also entered into an accord with COSCO Shipping Lines to construct a methanol-powered vessel to transport the manufactured methanol to international markets, thereby boosting Nigeria’s export potential.

Accelerating Nigeria’s Gas Ambitions

Being Africa’s largest oil producer, Nigeria has always struggled to shift focus away from oil; therefore, the abovementioned agreement will mark a stepping stone in exploiting its vast gas resources and promoting energy security over the long term. Nigeria’s estimated gas reserve is approximately 200 trillion cubic feet and per the deal, the JV will deliver 270 MMcf of gas per day to the brass fertilizer project in Bayelsa state.

SHEL’s Zacks Rank and Key Picks

London-based Shell plc is one of the primary oil super majors—a group of U.S. and Europe-based big energy multinationals with operations that span almost every corner of the globe. Currently, SHEL has a Zacks Rank #3 (Hold). The company remains a major investor in the West African country of Nigeria even after divesting its onshore business.

Investors interested in the energy sector might look at some other stocks like PEDEVCO Corp. PED,Core Laboratories Inc. CLBand Nine Energy Service, Inc. NINE.While Pedevco currently sports a Zacks Rank #1 (Strong Buy), Core Laboratories and Nine Energy carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Houston, TX, PEDEVCO Corp., is an oil and gas company engaged in the acquisition and development of energy projects in the United States and Pacific Rim countries. Over the past 60 days, the Zacks Consensus Estimate for PED's 2024 earnings has improved by 60%.

Core Laboratories Inc. provides reservoir description and production enhancement services and products to the oil and gas industry in the United States, Canada and internationally. CLB’s expected EPS (earnings per share) growth rate for three to five years is currently 22.20%, which compares favorably with the industry's growth rate of 14.50%.

Nine Energy Service, Inc. provides onshore completion and production services for unconventional oil and gas resource development. NINE’s expected EPS growth rate for the current quarter is 23.08%, which compares favorably with the industry's growth rate of 6.36%.

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