What new $10 billion NLNG train means for Nigerian economy

After several years of delay, the Nigeria Liquefied Natural Gas (NLNG) Train 7 project reached final investment decision (FID) on Friday, December 27, 2019. The project had missed a previous deadline in the fourth quarter of 2018 and, more recently, on December 19.

The decision by shareholders of NLNG Ltd to proceed with the construction of the country’s seventh liquefied natural gas production train is expected to have immense effect on Nigeria’s economy.

With the construction period projected at approximately five years after FID with first LNG rundown expected in 2024, the project is expected to increase Nigeria’s LNG production by 35 percent to 30 million tonnes per annum (mtpa).

NLNG is run in a unique way that is different from other public assets, as it is owned partly by the government and the private sector. It is, however, run exclusively by the latter, earning it plaudits along the way for its operational success.

The Federal Government, represented by NNPC, owns 49 percent of NLNG while international oil company Shell owns 25.6 percent. French oil company, Total Gaz Electricite Holdings, owns 15 percent and Eni owns 10.4 percent.

The Train-7 project is located at the Bonny Island LNG facility in the Niger Delta. Once complete, it will include a new liquefaction unit, an 84,200m3 storage tank, a 36,000m3 condensate tank, and three gas turbine generators.

“This is a gateway to more investment in Nigeria. We will take steps to get to Train 12. There is an opportunity to do this. NLNG is one of the most successful ventures in Nigeria,” Mele Kyari, group managing director (GMD) of Nigerian National Petroleum Corporation (NNPC), said.

Impact on Nigeria’s economy

The Train-7 project, when it finally takes off, is expected to greatly impact the national economy as it would boost the Federal Government’s revenue by $9 billion and generate about 10,000 direct jobs and 40,000 indirect jobs to ease the youth unemployment challenge in the country.

The project would deliver 100 percent engineering of all non-cryogenic areas in-country and also push up Nigeria’s profile as a major force to reckon with globally in terms of gas production.

“Train 7 is the crux of a growth agenda which will ensure the company’s position as the 5th major supplier of global LNG is maintained, increasing value to its shareholders and other stakeholders, as well as further reducing the gas that would otherwise have been flared, in fulfilment of its vision of being a global company, helping to build a better Nigeria,” Tony Attah, managing director of NLNG, said in a statement immediately after the signing.

“Over 12,000 jobs will be created during the peak of construction, trade and commercial activities with the Niger Delta region equally receiving a boost as a result.  The project will also support the development of local engineering and fabrication capacity in the country. Other opportunities for local content include procurement, logistics, equipment leasing, insurance, hotels, office supplies, aviation, haulage, and many more,” he said.

Simbi Wabote, executive secretary, Nigeria Content Development and Monitoring Board (NCDMB), said the benefits of the Train-7 project would extend to site civil works on roads, piling, and jetties, 100 percent local procurement of all low and high voltage cables, non-cryogenic valves, protective paints, and coatings, sacrificial anodes and many others from local manufacturing plants.

The target, according to the NCDMB boss, is to assemble over 70 percent of all non-cryogenic pumps and control valves in-country.

Wabote urged the SCD consortium to fully implement the agreed Nigerian content levels as contained in the approved Nigerian Content Plan for Train-7 project, covering engineering, fabrication, civil works, local procurement, project services, logistics, equipment leasing, insurance, hotels, office supplies, aviation, haulage, human capacity development and jobs.

History of NLNG trains

Trains 1-3 were a brainchild of the Shell-run Nigeria LNG, established to tap into Nigeria’s abundant gas resource and monetise it through LNG exports. The FID for the first two trains was received in November 1995. Production commenced in September 1999 for Train 2, while Train 1 started in February 2000. Train 3 commenced production in November 2002.

The next phase of development called the NLNG Plus project comprised Trains 4 and 5 and commenced in March 2002. Train 4 came on stream in November 2005 and Train 5 was started up in February 2006. The NLNG Six project, consisting of Train 6 and additional condensate processing and LPG storage facilities commenced in 2004. Train 6 became operational in December 2007.

With six trains currently operational, the entire NLNG plant is capable of producing 22 million tonnes per annum (mtpa) of LNG, and 5 mtpa of NGLs (LPG and condensate) from 3.5 billion standard cubic feet per day (Bcf/d) of natural gas intake. Gas is supplied via six main dedicated Gas Transmission Systems (GTS) with four of them on-shore. The addition of Train 7 is intended to enhance the total production capacity to over 30 million tons per annum of LNG.

OLUSOLA BELLO & DIPO OLADEHINDE