The Nigeria LNG Limited (NLNG) has disclosed that export of Liquefied Natural Gas (LNG) to the United States (U.S.) and other importers is no more profitable, following the sharp drop in gas prices in the U.S as a result of a gas glut in the once net importer of crude.
Natural Gas prices in the U.S. have fallen significantly since 2008 highs, making them among the lowest in the world, and attractive to buyers in Asia and Europe.
Babs Jolayemi Omotowa, managing director, NLNG, who disclosed this recently at the Annual Oloibiri Lecture Series, said: “Exporting LNG to the U.S is now a loss-making venture. It is no longer an attractive market for LNG supply as competition is drastically increasing, with many LNG projects springing up in the U.S.
“America is producing more gas than it knows what to do with . Now, there is a significant reduction in Nigeria’s exports to the U.S as gas price has seen more than an 85 percent drop. It used to be $13, now it is between $2 and $3,” Omotowa added.
Oil and gas majors including ExxonMobil, Shell, Total and BP are planning to export LNG as a way to relieve the glut of gas in the US caused by increased production from shale plays. US proven reserves of gas have increased nearly 50 percent since 2005, Stephen Pryor ExxonMobil Chemical President was quoted by Platts as saying.
Other companies seeking to export LNG include Shell, Total and British Petroleum. In all, the U.S. Department of Energy was said to have received 25 export applications.
ExxonMobil wants to export LNG through the Golden Pass terminal, a joint venture located in Sabine Pass, Texas, whose shareholders include Qatar Petroleum, which is the majority partner, and ConocoPhillips.
NLNG was established more than 20 years ago to harness Nigeria’s natural gas resources, which before that, were largely either being left in the ground or flared off as by-products of oil production, to produce liquefied natural gas and natural gas liquids for export.
The company, which has a capacity to produce 22 million tonnes of liquefied gas a year, has long-term supply contracts with buyers in Italy, Spain, Turkey, Portugal and France and also sells on the spot market.
It obtains its gas supply from the upstream oil companies and liquefies it for export.
‘FEMI ASU
