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Plaudits for NLNG Train 7

Many accolades have attended the signing on Friday, December 27, 2019, of the Final Investment Decision to build Train 7 at the Nigeria LNG plant in Bonny Island for $10 billion.  They stem from the many positives of the action.

We commend the principal stakeholders of the NLNG, being NNPC, Shell Petroleum Development Company, Total and Eni, and all Nigerians on this significant milestone.

Train 7 will increase the capacity of the plant from 22.5 million Metric Tons Per Annum (MTPA) to 30 million. The new liquefaction train will contribute the bulk of the additional capacity while about 3.4MTPA will come from the debottlenecking of existing trains. Nigeria’s share of the global LNG market would continue its rise beyond the current approximately seven per cent.

Nigeria LNG is a world-class six-train LNG plant operational since 1999. It took off as the country was returning to the path of democracy. It was a long journey to its take-off as plans for the plant commenced in the 1960s. The expansion will make NLNG one of the essential gas hubs in the world, thus allowing the partners to leverage Nigeria’s abundant gas resources further.

NLNG is a Nigerian success story and a model in several areas. Experts often cite its equity structure and ensuing management as one of the best ways to ensure public-private sector collaboration works. It has been an upright corporate citizen, paying over $7 billion in taxes to the government. It has also run a well-regarded corporate social responsibility and social investment scheme, contributing to education, arts and sciences and turning its host into a Nigerian model community.

Despite this, the FID for Train 7 suffered 14 years of delay out of the 20 years of the plant. Between 2000-2006, NLNG was the fastest-growing LNG operation in the world. It grew from one train to six quickly. Then the Nigerian Factor set in. Political leaders, including a son and daughter of the Niger Delta, would not approve the FID.

While Nigeria tarried inexplicably, Qatar that took off in 1997 rallied to become the global market leader. Qatar produces 78.7MTPA or 24.7 percent of the world market and plans to add 30MTPA.

Train 7 will create 12, 000 direct jobs and additional indirect 40,000 jobs. It will have multiplier effects on several areas. One of the fields will be in local content where NLNG has reached many agreements with the Nigerian Local Content Development and Monitoring Board.

President Muhammadu Buhari earns deserved kudos for approving the FID as both petroleum minister and head of state. The action is most welcome as it signals Nigeria’s readiness to play the investment game and once again return to the arena where companies and countries allocate their resources. Many projects have been hanging in this most critical of sectors for Nigeria, and the FID for Train 7 should restore confidence and open doors.

Train 7 is better late than never. In the 14 years of delay, significant developments happened in the gas market. About 19 markets export LNG in the world. Our neighbour Cameroon joined in 2018 with its 2.4MTPA Kribi Floating Liquefied NLNG project.

Demand for gas is secure with an average yearly growth rate of LNG demand at 6.4 percent since 2010. China and South Korea are the current drivers of import demand globally.

These factors informed efforts at building additional NLNG plants in the country that have now entered the voice mail of inexplicable delay. The dynamics of the market dictates that Nigeria must take advantage of available opportunities and make the most of its gas resources as nations diversify energy sources. Congratulations to the Nigeria LNG Limited on the FID for Train 7.

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