BP has warned that Liquefied Natural Gas (LNG) trade war, vulnerability and insecurity in global trade flows could have a particularly damaging impact on confidence in LNG as an energy source.
This could also affect the yet to take off train 7 as the market must be viable before off takers entered into any contract for any new deal for supply
BP said trade tensions could impact on LNG’s prospects as the world transitions to cleaner energy sources, by encouraging countries to resume a dependence on domestic resources rather than imports,
Bob Dudley, BP chief executive, told the LNG19 conference in Shanghai. “Gas is affordable, abundant, cleaner and easily transportable thanks to LNG”, says Dudley, while noting that global trade in the liquefied gas is set to more than double from 400bn m³/yr to around 900bn m³/yr by 2040.
But trade wars only serve to remind countries that becoming dependent on imported energy can create political risk. “Countries need to have confidence in the security of their gas supplies,” says Dudley.
Nigeria LNG is for export with very little for domestic use and if the trade war among countries continues and the customers of NLNG decide to look inward, the country may be in trouble, as it may look inward for what it can convert its gas to, an industry source said.
More than eight months after the signing of the Front End Engineering Design contract for Train 7 of the Nigeria LNG Limited, there is still uncertainty as to when the shareholders will take the final investment decision on the project.
The Nigeria National Petroleum Corporation, which is one of the shareholders, said in July last year that the FID for the project was expected to be taken in the fourth quarter of 2018.
The NLNG Train 7 expansion project aims to increase the company’s production capacity from 22 metric tonnes per annum to over 30 MTPA by upgrading Trains 1-6 and adding of train 7 and associated infrastructure at an estimated cost of $4.3bn, according to a statement by the NNPC.
However the contract for FEED was awarded to two consortia in July 2018.
According to Andy Odeh, the FEED work is expected to be completed by the second quarter of 2019.
“The NLNG is fully focused on achieving other pre-conditions, which will eventually lead to Final Investment Decision and the success of the project.”
FEED is the basic engineering conducted after the completion of conceptual design or feasibility study.
After FID on the Train 7 project, construction period would last approximately four to five years.
It is expected that train 7 will be operational by 2024. Long-term contracts have been signed,” he added.
The global LNG market as dynamic with increasing competition from new supply sources as well as new opportunities in established and emerging markets.
According to Odeh, Public Affairs manager, NLNG, “The NLNG, with its track record and years of experience in the market, is well positioned to compete in the market with our deliberate commercial and operational strategies, which enables us to deliver volumes efficiently across the globe.
“Our focus has always been to be a global player and deliver our products at the optimal value around the world.”
He noted that the NLNG had participated in the domestic market through the supply of Liquefied Petroleum Gas, also known as cooking gas, since 2007.
“We currently supply over 50 per cent of the LPG volumes of cooking gas in Nigeria. Our vision of helping to build a better Nigeria remains intact and we will continue to explore opportunities to further deepen the use of LPG in Nigeria by making the product available to the market,” Odeh said.
“The NLNG is also looking at options of increasing its footprints in the domestic market in line with the Federal Government’s aspiration on gas-based industrialisation in Nigeria.”
Olusola Bello
