Page 15 - DMEA Week 19 2020

DMEA TRANSPORT DMEA
NLNG awards $4bn EPC contract for Train 7
NIGERIA
It is hoped that by the time the train comes on stream in 2025 the market will have recovered.
NIGERIA LNG (NLNG) is pushing ahead with a plan to expand its liquefaction capacity by 35% despite record low LNG spot prices.
The international consortium comprising Italy’s Eni, France’s Total, Royal Dutch Shell and Nigerian National Petroleum Corp. (NNPC) has been awarded an engineering procurement and construction (EPC) contract to add a seventh train at Nigeria’s Bonny LNG terminal.
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 group were selected in September following a tender. The contract is worth more than $4bn, Saipem said, with its share amounting to around $2.7bn.
NLNG, Nigeria’s sole LNG producer, cur- rently 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 on stream in 2018. A final investment decision (FID) on the project was finally taken in Decem- ber, 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 existing trains will add a further 3.4mn tpy.
“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.
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 project.”
Construction is due to be funded by NLNG 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.”
Nigeria has considerable gas resources, esti- mated by BP at 5.3 trillion cubic metres proven. But it has struggled to raise its output in recent years because of a lack of new investment.
The expansion project is moving forward at a time when the global LNG industry is reeling in oversupply, as coronavirus (COVID-19) lock- downs continue to weigh down on gas demand. Lacking any market, some LNG buyers have deferred or cancelled purchases, leaving some LNG carriers stuck at sea unable to shift their cargoes.
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 Nige- rian economy get back on a growth trajectory.
“Unless projects like this go on, the economy will not improve,” Sylva said.
The Nigerian government has said before that the country could have as many as 12 LNG trains in operation. ™
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