Page 15 - AfrOil Week 20 2020
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AfrOil POLICY AfrOil
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] domesticLNGscheme,”hesaidduringavirtual 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 signaled that it was pushing ahead with a plan to expand its liquefaction capacity by adding a seventh 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 Septem- ber 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 Ital- ian company said, noting that its share would amount to around $2.7bn.
Currently, NLNG is Nigeria’s sole producer of LNG.
Umeh acknowledged that potential investors were reluctant to join gas-to-power projects because of concerns about tariff rates, unex- pected changes in the regulatory environment and difficulties in enforcing contracts. He asserted,though,thatprivatesectorfirmscould work within the existing regulatory regime to push gas-to-power projects forward. This is a better strategy than tying participation to legis- lative action, he added.
“Pick a set of regulations, such as the ones that birthed the only project-financed power plant in Nigeria to date, Azura power, [then] respect contracts and the rule of law to give local and foreign investors comfort, and just get itdone,”hesaid.
He added: “We have all the expertise we need to make the industry work, so let’s stop search- ing for the perfect solution elsewhere. Take whatever we have, and just make it work.”
PROJECTS & COMPANIES
NLNG eyes Nigerian domestic market
NLNG already has six operational production trains (Photo: KBR)
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