•NLNG may invest $10b in Train 7 gas supply, infrastructure
Nigeria Liquefied Natural Gas Limited (NLNG) Managing Director/CEO Tony Attah has said projections put gas in the top quartile of the most competitive and strategic investments in the global energy market.
Attah, who spoke at an executive roundtable discussion titled: “Growth Outlook and Strategies for Staying Competitive after a Global Downturn”, at the first Nigeria International Petroleum Summit (NIPS), in Abuja, said a combination of factors would give gas an edge as the energy of the future. He added that the global LNG trade was projected to nearly triple from about 12 trillion cubic feet (Tcf) in 2015 to around 31 Tcf in 2040.
“Electric power sector carbon emissions are projected to be flat through 2050 as a result of favourable market conditions for natural gas and supportive policies for renewables, compared with coal” he said, pointing out that the projections are underpinned by the prospect of the global economy growing at an average rate of 3.4 per cent per year, a population that expands from 7.4 billion today to more than 9 billion in 2040, and a process of urbanisation that adds a city the size of Shanghai to the world’s urban population every four months.
Attah said global energy consumption would increase in the future, but on the other side of the fence, we also see the clamour for cleaner energy rising, and that is where gas comes in. Coal would be totally displaced as a source of energy followed by crude oil.
“Oil will still be in demand, but (particularly as a source of power), will go down by about 50 per cent. Countries like the United Kingdom, Sweden, Norway and many other countries are making moves to significantly reduce their carbon footprint. Norway aims for all new passenger cars and vans sold in 2025 to be zero-emission vehicles, while Sweden has committed to 100 per cent renewable energy by 2040.”
He warned that Nigeria was losing the competitive space in the LNG industry. “Nigeria started 24 months after Qatar. Qatar now produces 77 million tonnes per annum (MTPA) and is the number one LNG supplier in the world, while Nigeria is still on 22 MTPA. Australia is already flooding the market and will knock down Qatar to the third, or fourth place. In Africa, significant gas finds in excess of 127 Tcf in Mozambique have created the potential for another African super player. Mozambique is expected to become the second-largest exporter of Liquefied Natural Gas (LNG) by 2025, as the country steps up production from 10 million tonnes per annum (Mtpa) in 2017 to an envisaged 50 Mtpa.”
Attah said the real investment opportunity was last year, when prices were low; but he, however, assured that it was not too late. He stated “that is why “we need to take the decision on Train 7 now so we can stay within the Top 5 space. The future is gas and NLNG is ready to play.”
He said for Nigeria to remain competitive in the oil and gas industry, upstream investment needed to be increased. “It’s time to prepare for the likely demand outlook that’s positive and has out-performed projections in the last three years,“he said, adding, “let’s get back to exploration and production (E&P) activities.”
Attah listed other strategies to include stable regulatory framework, ease of doing business, as well as strategic implementation of cost management by developing projects that are competitive under current pricing. In addition, he said implementing structural cost-saving measures, such as standardised, modular approaches to plant construction and embarking on new E&P projects that have shorter payback periods, are recommended. He said Train 7 project by NLNG will increase its production capacity from the current 22 MTPA to 30 MTPA of LNG.
Also, NLNG Deputy Managing Director, Sadeeq Mai-Bornu, said the NLNG business model needs to be replicated so as to generate opportunities for the power and gas sectors in the country.
He spoke at an executive roundtable discussion titled: “Africa as an Emerging Gas Producer: Prospects and Opportunities” also at the first Nigeria International Petroleum Summit (NIPS) in Abuja.
Other participants at the discussion included Shell Nigeria Exploration and Production Company Limited (SNEPCO) Managing Director, Bayo Ojulari; President, Nigeria Gas Association and Managing Director of Frontier Oil Limited, Dada Thomas; Group Executive Director and Chief Operating Officer (COO), Power and Gas at Nigerian National Petroleum Corporation (NNPC), as well as other executives in the industry.
Mai-Bornu said: “Nigeria is a gas country with some oil. NLNG is a success story partly because we are in the mid-stream and most of the risks have been taken by the upstream companies. But the thing is that there is a market out there. We sign a 20-year contract for the supply of molecules and we can actually go to the bank and get the funding we need. When NLNG was set up, it had guarantees and incentives that safeguarded investments and returns. There was also the sanctity of contracts. That is what has helped NLNG. This model needs to be developed in the upstream and downstream.
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