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Nigeria losing competitive space in global LNG trade — NLNG

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By Udeme Akpan and Sebastine Obasi

When the bell that ushered in the year, 2017, started to toll, there were indications that the final investment decision, FID, would be taken on Liquefied Natural Gas, LNG, trains seven and eight.

The reasons were not far fetched. First, the management of NLNG Limited had tried to eliminate the hurdles that stood between the company and the making of the FID. Second, other stakeholders, especially the Nigerian National Petroleum Corporation, NNPC, had also supported the project because of its expected importance to Nigeria’s economy.

But this was not to be. The FID was not taken, meaning that the project cannot take off despite its significance. This sad situation has attracted the comments of some people and organisations.

The Managing Director of Nigeria Liquefied Natural Gas Limited, NLNG, Mr. Tony Attah has cautioned  that the country was losing the competitive space in the LNG global industry due to non-implementation of FID on the additional trains.

Speaking at the just-concluded Nigeria International Petroleum Summit, NIPS, held in Abuja, Attah, who was represented by the Deputy Managing Director, Sadeeq Mai-Bornu said the project has been over-delayed.

Specifically, he noted that even though “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 trillion cubic feet, 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.”

“The real investment opportunity was last year when prices were low; but it is not too late. 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. It is time for gas.”

Available data obtained by Vanguard showed that the current trains have impacted positively on Nigeria’s economy, indicating that trains seven and eight would also make much additional impact.

For instance, the NLNG stated in its latest report that: ‘’Nigeria LNG Limited is the most significant arrow-head of the Federal Government’s quest to eliminate gas flaring and derive value from the country’s 187 trillion cubic feet of proven gas reserves.

‘’NLNG mops up gas that would otherwise be flared, thus making significant contributions to the nation’s income, delivering in the last 13 years over USD13 billion in dividends. The company has paid over USD18 billion on gas purchases from oil-producing companies, of which the Federal Government of Nigeria owns 55-60 per cent. Nigeria’s overall earnings from NLNG is now over 70 per cent, comprising of the 49 per cent dividend, 30 per cent Company Income Tax (CIT), and other taxes.

‘’With its plant construction, the company has generated considerable Foreign Direct Investment  for the country. NLNG contributed about 4 per cent of Nigeria’s GDP. As a good corporate citizen, the company also contributes immensely to national wealth and to the wellbeing of states in which it operates, by paying all applicable taxes and tariffs.

‘’In 2014, NLNG remitted over N200 billion for its 2013 CIT to the Federal Government, making it the highest CIT ever paid by a company in a financial year in the country. Nigeria LNG Limited provided more than 2,000 jobs each construction year. Overall, the major sub-contractors employed about 18,000 Nigerians in technical jobs in the Base Project.’’

Local content

Specifically, the company stated that: ‘’through each Nigerian Content plan for its contracts, NLNG has promoted the development and employment of Nigerian manpower. For instance, 600 Nigerians will be trained in Nigeria and at the contractors’ (Hyundai and Samsung) shipyards in Korea as part of the Nigerian Content deliverables tied to the construction of six new LNG vessels by Bonny Gas Transport (BGT), a wholly owned subsidiary of NLNG.

‘’Those 600 Nigerians, with enhanced skills in welding, hull assembly, pipe fitting, electrical, mechanical, painting and ship design will join the country’s workforce, providing a support base for technology transfer and industrialisation.

‘’Thirty-five of the Nigerian trainees are currently in Korea for participation in the ship construction and six Nigerians are already working as ship managers (two production managers, two QA/QC managers and two HSE managers) in the ship construction at the shipyards in Korea.”

‘’NLNG supports the development of community and Nigerian contractors to enable them achieve standards of excellence. In our host community, through the initiative to empower local contractors via the Finima Legacy Project, local contractors have made capital investments in their companies thereby expanding their operating capacity.”

The capabilities of local vendors have also been developed through mentoring and engineering of partnerships between the more established Nigerian vendors and the community vendors.

‘’NLNG’s shipping subsidiary, Bonny Gas Transport (BGT) recently ordered for six new Dual Fuel Diesel Engine (DFDE) LNG carriers. The carriers are currently under construction in South Korea by Hyundai Heavy Industries (two ships) and Samsung Heavy Industries (four ships).

‘’The Nigerian Content commitment in the project, which is defined in a Memorandum of Agreement between NLNG/BGT and the shipyards (Hyundai Heavy Industries and Samsung Heavy Industries) includes major initiatives such as the training and development of Nigerians (both in Nigeria and Korea) in various aspects of ship design and construction, the supply of materials such as paints, cables, anodes and furniture by Nigerian suppliers for the construction of the vessels, and feasibility study on the establishment of the first LNG ship dry-docking and ship repair yard in Nigeria.’’

LPG supply

It added that: ‘’NLNG commenced the supply of Liquefied Petroleum Gas (LPG) otherwise known as cooking gas to the domestic market in 2007 when refineries became challenged and supply was grossly inadequate. Since then, the issue of inadequate supply has become a thing of the past.

‘’The intervention, which is in line with company’s vision of helping to build a better Nigeria, has significantly contributed to the stimulation and development of the domestic LPG market in Nigeria and has effectively brought down the price of cooking gas from over N7,000 in 2007 to less than N3,500 per 12.5kg cylinder today.

‘’NLNG is committed to delivering 250,000 tonnes of LPG into the Nigerian market annually and has signed Sales and Purchase Agreements (SPAs) with fifteen off-takers (all Nigerian companies) for the lifting of LPG for the domestic market.’’

The post Nigeria losing competitive space in global LNG trade — NLNG appeared first on Vanguard News.

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