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NLNG eyes Nigerian domestic market
NIGERIA
THE Nigeria LNG (NLNG) consortium has said it hopes to start selling some of its production on the domestic market.
To date, NLNG has focused on the export market. But it is now interested in serving cus- tomers in Nigeria, according to Tony Attah, the group’s managing director and CEO. To this end, it is “engaging market players to kick-start [a] domestic LNG scheme,” he said during a virtual business forum organised by the Nigerian Gas Association (NGA).
Attah did not reveal many details of NLNG’s plan. He noted, though, that the consortium already had a foothold in the Nigerian fuel mar- ket – specifically, in the market for LPG. Cur- rently, he explained, the group is delivering LPG to 36 Nigerian companies for local distribution.
Finding additional domestic customers will allow NLNG to support the Nigerian govern- ment’s effort to make better use of the country’s natural gas reserves, he added.
Representatives of the consortium indi- cated last month that NLNG intended to adapt its business strategy in light of recent develop- ments – namely, the demand destruction and bear markets that have followed the coronavirus (COVID-19) outbreak and the Saudi-Russia oil price war. They told Punch that the pandemic had changed the outlook for all businesses, including LNG suppliers.
“NLNG continues to closely monitor the global impact of COVID-19 and adapt as appro- priate to meet our contractual obligations and achieve resilience,” they were quoted as saying by the newspaper.
EPC contract award
Attah was speaking several days after NLNG sig- naled that it was pushing ahead with a plan to expand its liquefaction capacity by adding a sev- enth train at its Bonny Island terminal, despite record low LNG spot prices. According to press reports, the consortium awarded an engineering, procurement and construction (EPC) contract to a group it selected in September following a tender.
The contract was issued to Italy’s Saipem, Japan’s Chiyoda and South Korea’s Daewoo, Saipem confirmed in a statement on May 13.
The contract is worth more than $4bn, the Italian company said, noting that its share would amount to around $2.7bn.
Currently, NLNG is Nigeria’s sole producer of LNG.
It produces up to 22.5mn tonnes per year
(tpy) of the super-cooled gas, placing the country among the top five LNG producers in the world. The group launched its sixth train more than a decade ago, and its seventh was originally due to come on stream in 2018. A final investment decision (FID) on the project was finally taken in December, and NLNG went on to finalise offtake
deals, including with Total and Eni.
The unit will be able to turn out up to 4.2mn
tpy of LNG, while the debottlenecking of exist- ing trains will add a further 3.4mn tpy. This will bring the plant’s production up by a total of 35%.
“The construction phase of Train 7 can now commence in earnest,” Nigerian Petroleum Min- ister Timipre Sylva said during an online event on May 13.
Conditions met
Shell issued a statement saying that all con- ditions for the December FID had now been met, including “a formal commitment from the organisations providing financing for the pro- ject.”ConstructionisduetobefundedbyNLNG without shareholder loans or shareholder equity requirements.
‘‘We are happy with the progress NLNG has made over the years and its enormous contribu- tions to the Nigerian economy,” Shell’s country chair in Nigeria Osagie Okunbor commented. “The EPC awards for Train 7 is good news for Nigeria with the potential to bring more export revenues, unlock new projects, and attract for- eign direct investments [FDIs], in addition to transforming the economy of the Niger Delta and Nigeria as whole.” `Train 7 is due to start up in 2025, by which point NLNG is hoping that the market will have recovered. Investments will also help the Nigerian economy get back on a growth trajectory.
“Unless projects like this go on, the economy will not improve,” Sylva said.
The NLNG consortium includes four shareholders: Nigeria National Petroleum Corp. (NNPC), with 49%; Royal Dutch Shell (UK-Netherlands), with 25.6%; Total, with 15%, and Eni, with 10.4%. The group began operat- ing in 1989 and has already built six production trains at its gas liquefaction plant on Bonny Island. The Nigerian government has said before that NLNG could eventually have as many as 12 trains in operation.
The expansion project is moving forward at a time when the global LNG industry is oversup- plied, as coronavirus (COVID-19) lockdowns continue to weigh down on gas demand.™
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w w w . N E W S B A S E . c o m Week 20 21•May•2020