Nigeria’s NLNG Train 7 on track as Saipem confirms deal

Italian contractor, Saipem says its letter of intent (LoI) regarding engineering, procurement and construction contract for Nigeria LNG (NLNG)’s Train 7 liquefied natural gas expansion project comprises a single train and a liquefaction unit.

An LNG train is a liquefied natural gas plant’s liquefaction and purification facility. Each LNG plant consists of one or more trains to convert natural gas into liquefied natural gas. A typical train consists of a compression area, propane condenser area, methane, and ethane areas.

On Thursday, Saipem confirmed that alongside its partners in the SCD Consortium (Japan’s Chiyoda and Daewoo E&C of South Korea) it has signed the LoI with NLNG for the planned development at Bonny Island in Rivers State, Nigeria, according to an Upstreamonline report.

Train 7 involves adding 8 million tonnes per annum to current capacity at NLNG of 22 million metric tonnes per annum (MMtpa) for a total of around 30 MMpta.

The SCD and B7 groupings had entered into a competitive front-end engineering process, which ended in May, with bids entered in June.

In the race to land the EPC contract for Train 7, the SCD consortium was seen as being the competitor to beat ahead of the B7 consortium – comprising KBR, TechnipFMC, and JGC.

Saipem says “the intended award of the EPC contract is conditional upon the approval of Nigeria LNG Limited’s board of directors and shareholders, the approval of any governmental or regulatory authorities, the achievement of any conditions precedent to a final investment decision by Nigeria LNG Limited and the execution of a legally binding EPC contract by the parties.”

No contract value for the full EPC award has been revealed, but Upstream understands it will be around $6 billion. Saipem said its share in the SCD grouping is around 60 percent.

NLNG is intent on taking a final investment decision on Train 7 at the end of October. Assuming project sanction is taken this year, the new train could be up and running in 2023.

Located in Rivers State, the NLNG facility is owned by state-owned Nigerian National Petroleum Corporation – which has a 49 percent stake – while Shell has a 25.6 percent interest, Total holds 15 percent and Eni is on 10.4 percent.

Nigeria has enormous natural gas potential but the development of this potential has stagnated. According BusinessDay’s analysis, Nigeria started its LNG operations 24 months after Qatar but Qatar now produces 77 million tonnes per annum, while Nigeria has not moved the needle on 22 metric tonnes per annum (MTPA).

In Africa, significant gas finds in excess of 127 trillion cubic feet in Mozambique have created the potential for another African super player. Mozambique is expected to become the second-largest exporter of liquefied natural gas by 2025, as the country steps up production from 10 million tonnes per annum in 2017 to an envisaged 50 Mtpa.

Mauritania and Senegal have disposed of both political and infrastructural resources to develop their new discoveries of gas reserves as Nigeria, Africa’s largest proven gas reserves holder struggles with a burden of infrastructure inefficiencies.

For Nigeria, infrastructure challenges have slowed down the development of its 185 trillion cubic feet (Tcf) of gas reserve. The plans to build the Nigerian Liquefied Natural Gas (NLNG) Train 7 have remained on the drawing board for over eight years.

Meanwhile, the final investment decision (FID) for the Tortue development offshore Mauritania and Senegal will include a floating liquefied natural gas (FLNG) production unit, by the end of 2018. This would be the second FLNG facility in Africa.

The first in the world was Malaysia, which was launched in 2016 and first in Africa was Cameroun’s $1.2 billion FLNG project, which shipped its first liquefied natural gas (LNG) cargo in May 2018.