BusinessDay

FG, gas producers in talks over new LNG trains

The Federal Government of Nigeria is in talks with major gas producers in the country for the development of more Liquefied Natural Gas (LNG) trains to take advantage of the growing global demand for gas.

Ed Ubong, managing director of Shell Gas Nigeria, told BusinessDay on the sidelines of the World Gas Conference in Daegu, Republic of Korea, that the talks are proceeding accordingly.

“After the successful commencement of NLNG Train 7, it is only logical to build on that success,” said Ubong.

He said that the Nigerian government’s priority at the moment is to lock in the gas fields that will serve new LNG trains.

While there is no clear timeline for when new projects will commence, the government is not waiting for the completion of Nigeria LNG (NLNG) Train 7 before it expands its footprint in the gas market.

On guaranteeing domestic supply of gas, Ubong said Nigeria is looking at building more mini-LNG plants as there are now technologies that make it easier to set up the plants a lot cheaper with some able to supply as much 5 million standard cubic feet per day.

A major challenge for gas production in Nigeria is distribution as the network of pipelines does not cover the country and is prone to attacks and sabotage. With mini-LNG plants, gas is trucked across the country, even if at a higher cost.

Ubong said the short-term focus is to leverage technology to guarantee local supply at the point it is needed most and gradually ramp up capacity to export big volumes.

However, the Nigerian National Petroleum Company (NNPC) foraging for cash as petrol subsidy weakens its ability to finance projects from its cash flow.

The refusal to give the green light for the Mobil Producing Limited share sale deal with Seplat Energy Plc by President Muhammadu Buhari, who doubles as the petroleum minister, is seen as an obstacle to the financing required to develop what are predominantly gas fields under the deal.

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This has made it imperative for the NNPC to ramp up financing for new developments and Mele Kyari, group managing director of the NNPC, at the WGC 2022, made pitches to investors to take up opportunities in developing the country’s gas.

He decried how underinvestment in the sector is leaving the world unable to meet its energy needs and making it harder to replace reserves.

He called for a balance between balancing climate concerns with guaranteeing energy security today.

To guarantee supply certainty and meet global demand, the Nigerian government is also revisiting abandoned LNG projects.

Last month, Timipre Sylva, minister of state petroleum resources, said the Federal Government was seeking new investors for the abandoned LNG projects in the country.

The two abandoned gas projects are the Olokola LNG project, with 12.6 million metric tonnes capacity, stalled because all the international oil companies (BG, Shell, and Chevron) withdrew from the project, with only the NNPC left; and the Brass LNG project, designed to produce 10 million metric tonnes per annum, which was to be built by the NNPC, Total, ConocoPhillips, and Eni Group but ConocoPhillips withdrew from the project in 2013.