Shares digital

West African explorer Afren (AFR) has agreed a deal with German energy giant E.ON with a view to eventually building an LNG plant in Nigeria.

The joint venture, which also includes private company African LNG, will target the growing appetite in the West for African gas. Chief executive Osman Shahenshah says: ‘We are honoured to be working with E.ON Ruhrgas, a pre-eminent gas company. Afren remains at the forefront in contributing to the government’s ambitions to develop Nigeria into a major gas producer and assist with the reduction of gas flaring in the region.’ Broker Merrill Lynch says this is a ‘key milestone in Afren’s gas strategy’ and while conceding that the venture is at an early stage, it reiterated its ‘buy’ recommendation and set a price target of 140p.

Shares had been on a storming run, doubling in 2007 but fell back during the market turmoil to current levels around the 100p mark. Elsewhere the company is due to start drilling its flagship Okoro Setu development, which is expected to be onstream by April.

Shares says: This new project just adds to Afren’s appeal.

by: Tom Sieber