South Korea is to build a liquefied petroleum gas facility in Nigeria.

A consortium of Nigerian and South Korean companies said this week they plan Tuesday to build Africa's largest gas-to-liquid plant in Ogoni area of Rivers State, costing $5 billion, to be ready by 2016. The LPG processing plant will be in Oguta in Imo state.

The agreement is between Nigeria's Drake Oil Ltd of and South Korea's SK Engineering and Construction Group, Abuja's Daily Trust newspaper reported Wednesday.

"We are talking about $5 billion for the gas to liquid project, which will be bigger than any refinery in Nigeria," said Drake Oil Ltd Executive Chairman Sam Dede.

He said it would take 3-4 years to complete construction.

"As we speak now, Drake has about 500,000 cubic feet of gas allocated to it by the federal government," Dede said. "You are aware that we have been in the forefront of stopping gas flaring in Nigeria and that is contained in our MoU with the NNPC, which we signed in 1994 and have been working on together to achieve."

South Korea's SK Engineering and Construction Group Chief Executive Officer and Vice Chairman Yoon Suk-kyung said his firm decided to invest in Nigeria because of the nation's great potential.

"I believe there are many areas for us to utilize our technology and experience," Yoon said. "We are not just here to sign the MoU for mere documentation but we need action."

SK Group is engaged exploration and production activities in 27 oilfields in 15 countries.

Abuja is moving toward reasserting its control over foreign joint ventures, providing opportunities for Nigerian companies, which could create difficulties for the new SK venture.

Ernest Nwakpa, the executive secretary of the Nigerian Content Monitoring and Development Board, said conditions encouraging both indigenous and foreign companies would be subject to the fulfillment of conditions as may be specified by the Minister of Petroleum Resources.

"In the bidding for any license, permit or interest, and before carrying out any project in the Nigerian oil and gas industry, an operator shall submit a Nigerian Content Plan to the board, demonstrating compliance with the Nigerian content requirements of this (the Nigerian Content) Act," he said.

The legislation requires multinational companies to domicile a proportion of their assets in Nigeria in order to promote indigenous ownership of equipment while mandating the development of local capacities.