Page 16 - DMEA Week 34 2021

DMEA TERMINALS & SHIPPING DMEA

NLNG having difficulty

upholding supply commitments

AFRICA THE Nigeria LNG (NLNG) consortium is If appropriate actions are not taken, he added,
reportedly struggling to meet its commitments the number of affected cargoes could rise to 50
to customers. by the end of the year and customers may start
Sources told The Nation earlier this week that looking to other suppliers outside Nigeria.
NLNG had experienced difficulties with more Meanwhile, a market source pointed out that
than 20 LNG cargoes within the last six months. NLNG’s problems were “causing major supply
The shipments appear to have been delayed or disruptions and a very high level of operational
otherwise disrupted as a result of NLNG’s ina- inconsistencies, leading to unnecessary demur-
bility to secure enough feedstock from all of its rage exposures and penalties.” He added: “If
foreign shareholders, they alleged. things continue in this perception and complex-
The sources pointed to Eni (Italy), a minority ities set in, it won’t be surprising to see off takers
shareholder in NLNG, as the primary source of demand for performance guarantees for future
the problem. They told the Nigerian newspaper lifting.”
that the Italian major was only delivering about The market source went on to say that this
50% of the promised volume of gas to the con- development might hinder NLNG’s expansion
sortium’s liquefaction plant on Bonny Island. plans – namely, the Train 7 project. Disruptions
This compares unfavourably to Royal Dutch on this front “will be disastrous [for] credit rat-
Shell (UK/Netherlands) and TotalEnergies, ings and could impact on future financial syndi-
which are currently supplying about 90% of the cation for LNG project expansion,” he said.
contracted volume, they said. The NLNG consortium is the operator of a
One of the sources noted that NLNG’s six gas liquefaction plant on Bonny Island. The facil-
existing production trains were capable of oper- ity has six operational production trains capa-
ating at nearly 90% of their nameplate capacity. ble of turning out a total of 22.5 mn tonnes per
The trains cannot maximise or optimise LNG year (tpy) of LNG, and its capacity is set to rise to
production unless they receive enough gas, and 30mn tpy as a result of the Train 7 project.
as a result, they suffer the consequences when This scheme envisions the construction of
the consortium’s foreign shareholders do not a seventh production train that can turn out
uphold their commitments, he said. 4.2mn tpy, as well as the debottlenecking of exist-
The source urged Eni and the other inter- ing trains, which will add another 3.4mn tpy of
national oil companies (IOCs) that hold stakes capacity.
in NLNG to make concessions for the sake of Equity in the consortium is divided between
reducing the “performance reputational risk” state-owned Nigerian National Petroleum
that the group now faces in international mar- Corp. (NNPC), with 49%; Royal Dutch Shell
kets. He did not recommend any particular (UK/Netherlands), with 25.6%; TotalEnergies
solutions, but he said that the group might soon (France), with 15%, and Eni (Italy), with 10.4%.
have no choice but to acquire LNG from third- The partners began production in 1999 and
party vendors in order to meet their supply broke ground on the Train 7 project in June of
commitments. this year.™

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