By Udeme Akpan
Nigeria has retained its position as the fourth leading exporter of Liquefied Natural Gas (LNG), with 22 million metric tonnes (MMT) per year, despite the recent opening of Australia’s $S40 billion Ichthys LNG plant.
The opening of the new plant in Australia with 8.9 MMT of LNG annually was expected to change the current ranking of nations, especially the top five LNG exporters – Qatar with 77.2 MMT, Australia with 44.3 MMT, Malaysia with 25 MMT, Nigeria with 22 MMT and Indonesia with 16.6 MMT – in the world.
In an email to Vanguard, Chief Executive, EnergyQuest, Dr. Graeme Bethune recently quoted Japanese Prime Minister, Shinzo Abe, as stating: “the project is set to drive Australia to the premier LNG export position.”
He stated: “The total Australian LNG shipments were significantly higher in October at 6.4 million tonnes (Mt) – up 10.3 per cent on 5.8 Mt in September.
“The increased shipments were boosted in part by the start of production from the Ichthys plant which saw its first LNG cargo depart Darwin on October 22, followed by two further cargoes, adding that shipments were 76 Mtpa on an annualised basis, prior to any significant production from Ichthys (annual capacity of 8.9 Mtpa) and the start-up of Shell’s Prelude project (3.6 Mtpa).”
But investigation by Vanguard showed that the situation remained unchanged as the additional 8.9 MMT remained insufficient to lift Australia ahead of Qatar that has the capacity to export 77.2 MMT annually.
Also, it showed that Nigeria’s position would increase in future with the eventual completion of the nation’s planned LNG train seven, thus enabling Nigeria to increase its LNG output from 22 MMT to 30 MMT annually.
Train 7
Already, the NLNG has awarded the contracts for Front End Engineering Design (FEED), of its planned plant expansion project, Train 7, to B7 JV Consortium and SCD JV Consortium, inching closer to realising its expansion goals of increasing liquefied natural gas production output from 22 Million Tonnes Per Annum (MTPA) to 30 MTPA.
The company stated that the consortia, B7 JV Consortium comprising American company KBR Inc., Technip of France and Japan Gas Corporation (JGC); and SCD JV Consortium, made up of Saipem of Italy, Japan’s Chiyoda and Daewoo of South Korea, will participate in the Dual FEED Process and produce a Basic Design Engineering Package (BDEP), that will determine their EPC pricing, and eventually their bids to construct the train.
Managing Director/Chief Executive Officer of NLNG, Mr. Tony Attah, said: “The Front End Engineering Design is the most crucial part in the build-up to the actualisation of Train 7, after some delay and lost opportunities to reinforce Nigeria’s position prominently on the global energy map. Today’s event goes to show that Train 7 is alive.
“Typically, FEED takes about 9-12 months but we have explored another strategy for this project by adopting the Dual FEED Process which awards this crucial part of the Train 7 project to two prospective engineering consortia, instead of one contractor. This gives us a degree of freedom to start FEED and sometime after, EPC Bidding, with both activities overlapping. We remain committed to taking FID as soon as these processes are complete.
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“The history of the LNG industry in Nigeria is chequered. After about 30 years of trying to get an LNG project going, in 1989 NLNG was incorporated and one FID after the other, 6 trains were built in quick succession, making us the fastest growing LNG company in the world at the time. But we lost steam after 2007, while the rest of the world went past us with the development of their gas resources and the gain of greater market share.
“We started our LNG industry 24 months after Qatar, but Qatargas has attained a production capacity of 77 MTPA with additional target of 30 per cent LNG production in the immediate future. I believe it is time to reset the narrative. It is time for gas revolution in Nigeria.
“So, 30 years after the incorporation of NLNG, and 20 years after we exported our first LNG cargo, we are looking to the future and that future for us is Train 7. Activities are lining up for this project. With the continued support of the Federal Government of Nigeria and the shareholders towards this future, the odds are clearly in our favour.”
Funding
Attah said NLNG will be seeking an estimation of $7 billion from the global international markets to cover the construction of Train 7 and investment in the upstream gas sector in Nigeria that would ensure the sustainability of feedgas supply to its existing trains (Trains 1 to 6) and the new Train 7.
“We are committed to our expansion goals of building an additional production train for our plant. We believe this would ensure our country becomes a country that has been able to unleash its gas potentials and one that is in a transitional state from an oil-based economy to a gas-based economy. We also hope that Train 7 will change the country’s revenue and foreign investment profile.”
He remarked that NLNG commemorated the repayment of a $5.45 billion shareholder loan. The consolidated loan contributed towards funding the Base Project, Expansion Project, NLNG Plus Project and Train 6. The final repayment, which is a milestone for NLNG and Nigeria, sends a strong message to the world that Nigeria is ready for more foreign investments.
He added that the economic impact of increased LNG production output will be significant, stating that since the start of operations 19 years ago, NLNG has generated more than $90 billion in revenue and has paid over $16 billion dividends to the Federal Government, with respect to its 49 per cent shareholding in the company, held by the Nigerian National Petroleum Corporation (NNPC). In addition, NLNG has paid about $13 billion to the Federal Government for feedgas purchases and $6.5 billion in taxes.