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Competition grows as Nigeria’s LNG projects await FID

Competition grows as Nigeria’s LNG projects await FID

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’Femi Asu

With growing competition in the global Liquefied Natural Gas market, two LNG projects in Nigeria have continued to face an uncertain future.

Three LNG projects in Nigeria – Olokola LNG, Brass LNG and the NLNG’s Train 7 – have suffered setback as a result of the delay in taking final investment decision by the stakeholders.

Earlier this month, the Nigerian National Petroleum Corporation, Shell, Total and Eni signed the front-end engineering design contract of the Train 7 of the Nigeria LNG Limited, with the FID expected in the fourth quarter of the year.

The OK LNG project was stalled because all the international oil companies (BG, Shell and Chevron) withdrew from the project, with only the NNPC left.

The Brass LNG project, which was designed to produce 10 million metric tonnes per annum, was to be built by the NNPC, Total, ConocoPhillips and Eni Group. But ConocoPhillips withdrew from the project in 2013.

The US and European oil majors such as Royal Dutch Shell and Chevron have invested huge sums over the last decade – often more than they have spent on oil – in an attempt to dominate the LNG market, especially through mega-projects in Australia such as Chevron’s Gorgon or Shell’s Prelude, according to Reuters.

The main battle ground for the LNG market share is Asia, which consumes 70 per cent of the fuel and where it is seen as a key fuel to meet soaring energy demand without the rampant pollution that comes with coal.

The world’s biggest LNG buyers are utilities, especially from Japan and South Korea.

Australia has invested hundreds of billions of dollars in a bid to overtake Qatar as the world’s top LNG exporter by 2019, a challenge Qatar is now rising to.

Qatar, whose state-owned Qatar Petroleum has partnered the US oil giant Exxon Mobil to produce its LNG, has a strong interest in defending its position.

The Chairman, SPE Nigeria Council, Mr Chikezie Nwosu, stressed the need for Nigeria to fully tap its abundant gas resources as part of efforts towards diversifying the economy.

He said, “The OKLNG and Brass LNG projects cannot be allowed to die. There are people from outside Nigeria who are looking to continue to develop their LNG plants through taking gas resources from Nigeria. Other countries are saying, ‘If you’re not using your gas, please bring it to us; we have need for it.’ We can commercialise it. The government needs to wake up.”

The Chairman, Strides Group, Moritz Abazie, described gas as the energy of the future despite the threat of alternative energy sources.

He said, “Besides the use as energy source, gas is in high demand for industrial processes as feedstock for chemicals and fertilisers. The country’s gas potential is enormous. This presents a good opportunity to complement revenue from oil exports for economic development if well managed.

He stated that China and the rest of Asia had been driving growth in the demand for gas due to growing economies and effort to improve air quality.

Abazie, who noted that Nigeria was the fourth largest LNG exporter in 2016, according to the World LNG Report, said, “However, delays in taking final investment decisions on various LNG projects in the country have started eroding our market share in the global market.

“While we are going slowly on these, the United States, Australia and Russia are ramping up to take advantage of the growing demand. The International Energy Agency disclosed in its latest gas market report (‘Gas 2018’) that the USA would account for about 75 per cent of global LNG export growth by 2023 and would control 20 per cent of total market share.”

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