Page 5 - AfrOil Week 37 2022

AfrOil COMMENTARY AfrOil

by Nigeria LNG (NLNG), the operator of a gas European gas demand will no longer justify
liquefaction plant on Bonny Island. NLNG is their construction.
currently Nigeria’s only producer of LNG, and Meanwhile, with respect to the LNG plant
it is currently engaged in an effort to build a expansion, this project is in motion and was
seventh production train and debottleneck its reported last month to be about 30% complete.
six existing trains in order to boost output from It is due to be finished in 2024, and NLNG can
22mn tonnes per year to 30mn tpy. reasonably expect to accomplish the 30% pro-
Meanwhile, with respect to the pipeline, Sylva duction capacity increase it is seeking. However,
alluded to ongoing discussions on the Trans-Sa- there is a strong possibility that work could fall
haran Gas Pipeline (TSGP). This proposed pipe- behind schedule due to labour unrest, technical
line would run from south to north through problems, supply chain disruptions and the like.
Nigeria before crossing Niger and continuing to And with respect to production, it is truly not
Algeria’s Hassi R’Mel field, where it could con- clear whether Nigeria will achieve Sylva’s stated
nect to several gas transportation systems serv- aim of bringing gas yields up from 8 bcf (226.6
ing European markets, including the Medgaz mcm) per day to 12.2 bcf (345.5 mcm) per day.
line to Spain and the Trans-Mediterranean line The main reason why it is not clear is that Sylva
to Italy. TSGP would have a throughput capacity did not offer any parameters for this target. For
of about 2.092 bcf (82.19 mcm) per day, or 30 example, he did not say how quickly he expected
bcm per year. output to rise to the higher level, whether he
According to the minister, Abuja expects to anticipated the new production streams to come
make a final decision on this initiative in the from greenfield projects or brownfield develop-
near future. NNPCL and its Algerian counter- ment operations, how much gas was likely to
part Sonatrach will both be involved in building come from deepwater fields versus shallow-wa-
the pipeline, and Italy’s Eni and other private ter and onshore fields with lower production
companies have shown interest, he said. “Every- costs, whether additional volumes would con-
body is welcome” to join the project, he added. sist of associated gas or natural gas or what kind
of support Nigeria’s government might provide
Overstating capabilities to producers. These are not trivial matters; they
So it seems that Nigeria is planning for two large- are important because they help drive develop- Sylva declared
scale pipelines, an LNG plant expansion and ment strategy. And without further clarification,
production growth of more than 50%. This is a it is difficult to comment sensibly on Sylva’s that Nigeria
very ambitious agenda – ambitious enough for it statement. would be in a
to raise the question of how realistic it is.
The answer to that question is: probably not Little immediate relief for Europe position to supply
completely realistic. The upshot of this is likely to be, NewsBase
With respect to the pipelines, Nigeria is likely believes, that Nigeria will make (and is making) more LNG to
to encounter several possible obstacles. It might genuine efforts to increase the amount of gas it
be caught up in the ongoing diplomatic dis- produces and exports, particularly to the Euro- Europe by next
putes between Algeria and Morocco if it tries pean market. winter.
to build both NMGP and TSGP. It is likely to As such, European buyers are likely to snap up
have difficulty raising the required financing, more Nigerian LNG in the winter of 2022/2023
since NMGP is expected to cost around $25bn, than they did in the winter of 2021/2022. How-
and TSGP $13bn. (Meanwhile, NLNG’s Train ever, volumes may be slow to rise – and may not
7 expansion project already carries a price tag swing markedly upwards until the Train 7 pro-
of $10bn). It may face security challenges in ject is wrapped up in 2024 or later.
northern Nigeria and along other sections of In the meantime, the large-scale pipe-
the transit route. It could find that these road- line projects touted by Sylva and Kyari will
blocks, along other problems that have not been continue to sound exciting but will offer no
anticipated, slow the pace of work so much immediate results – and no immediate relief
that by the time the pipelines are finished, to gas-hungry Europe.™

Week 37 15•September•2022 www. NEWSBASE .com P5