Investors falling over Qatar’s LNG tender scorned Nigeria’s overtures

Qatar is courting foreign investors to buy a stake in its gas expansion project and the energy companies falling over themselves are the same ones that turned their noses against Nigeria’s invitation to invest in its Liquefied Natural Gas (LNG) plants.

The Middle East country’s tender is drawing interest from long-standing partners as well as newcomers Chevron, Norway’s Equinor and Italy’s Eni, says a report by Reuters. Meanwhile, Nigeria’s has not had a significant investment into its LNG in over two decades.

Already, Qatar is the world’s highest LNG producer at 77 million tonnes per annum (mtpa) but countries like Russia, Australia, and the United States are racing to catch up. So at home, it developed an elaborate plan to ramp up liquefaction capacity to 110 mtpa within five years while abroad it is investing in the LNG capacities of its rivals.

Contrast this with Nigeria where investors have largely been unimpressed with overtures to build new liquefaction plants.  NLNG Train 7 still sputters after nearly a decade.

Since the development of the NLNG, new projects have been too few and far between. Three LNG projects in Nigeria: Olokola LNG, Brass LNG and the NLNG’s Train 7 have been unable to reach final decision by the stakeholders as investors have pulled out.

The OK LNG project was stalled because all the international oil companies (BG, Shell and Chevron) withdrew from the project, with only the Nigerian National Petroleum Corporation (NNPC) left.

The Brass LNG project, which was designed to produce 10 million metric tonnes per annum, was to be built by the NNPC, Total, ConocoPhillips and Eni Group. But ConocoPhillips withdrew from the project in 2013 and has stalled since then.

The difference is an uncertain investment climate worsened by regressive policies. Two years ago, politicians were seeking to amend the NLNG Act without recourse to investors thereby violating the sanctity of contract it signed with investors.

Investors have left the downstream sector of the oil industry in Nigeria because politicians prefer campaigning on cheap petrol than a thriving economy. Qatar refines its own petrol and sells it to its people at N195 per litre. Nigeria buys imported petrol and sells it at N145 per litre. It spend over N1.6trillion last year in subsidies.

Like Nigeria, Qatar has a state-run oil company, Qatar Petroleum (QP) who is preparing to issue tender seeking partners to invest in the construction of a fourth LNG train. Nigeria’s NNPC rolled out the drums two weeks ago to celebrate a fuel-scarcity free holidays.

“Qatar’s pivot from mostly self-financing its gas sector to offering ownership to foreign firms is also a cleverly orchestrated geopolitical move, considering its still terse tensions with Saudi Arabia, the United Arab Emirates, Bahrain and Egypt. It’s a hedge that in case relations with the four major Arab countries continue to sour, it has the protection of foreign oil companies vested in its energy sector – a pure energy play with brilliant geopolitical overtones” writes Tim Daiss, an oil markets analyst for Oil Price.

It is this kind of critical thinking and rigor that is absent in Nigeria’s policy formulation and execution which is scaring away investors.

ISAAC ANYAOGU