• Friday, March 29, 2024
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BusinessDay

Nigeria left in the cold as oil partners jostle for position to ride an LNG boom

Nigeria-LNG

The Nigerian National Petroleum Corporation (NNPC) joint venture partners that initially indicated interest in participating in the development of two LNG projects are strategically moving away to other places to either help build or acquire equity shares in LNG projects across the world. Their main reason is to position themselves for the expected LNG boom.

The Olokola LNG with capacity of 12.6 million metric tonnes (mtpa) per year or 1.81 billion cubic feet per day (bcfd), which was launched with very high prospect for Nigeria, has almost become non-existent now. The project was spearheaded by NNPC with Chevron, one of the joint venture companies fully involved, but the project is now dead even though there was the award of a US$14.5 million contract for the front-end engineering design of the project.

The contract was to be executed within 145,000 engineering man-hours and would employ 100 engineers. It would also provide opportunities for skill development and competence enhancement for Nigerian engineers through technology transfer.

Today, Chevron has abandoned the project in Nigeria because of lack of seriousness on the side of the promoters.

The Brass LNG, which was planned to come into production before Olokola, is in a state of hopelessness despite the fact that the NLNG train 7 was put on hold for it to take off.
As of today, neither Brass LNG nor NLNG train 7 has taken off because of lack of seriousness by the NNPC which is representing the government in the projects.

Some of the companies that are partners of NNPC in one LNG project or the other include Shell, Chevron, Total and Eni.

Victor Eromosele, a former general manager at Nigeria Liquefied Natural Gas (NLNG), blamed the exit of the companies to other climes with more conducive environment to government’s delay in taking decisions.

Another industry operator who does not want his name mentioned said that if the government was serious and did not play politics with the projects, Nigeria would have been at the forefront of the LNG globally now.

The firms are reshuffling their portfolios in favour of gas ahead of the looming energy inflection point.

Analysts say although gas may not dominate energy supply for another 10-20 years or more, the industry is looking over the horizon.

Following on from a series of LNG-driven Mergers and Acquisitions (M&As) that included ExxonMobil’s acquisition of a 25 percent stake in Mozambique Area 4 and Shell’s purchase of Chevron’s position in Trinidad, Total and others have maintained the momentum. The latest round of deals reflects a continuing scramble for the whole working package-access to low-cost fields, transport, sales and purchase contracts, and regasification.

The NNPC, Shell, Total and Eni signed the front-end engineering design contract of the Train 7 of the Nigeria Liquefied Natural Gas Limited not too long ago. This is coming up 11 years after it was conceived.

With six trains currently operational, NLNG’s plant on Bonny Island in Rivers State is capable of producing 22 million tonnes per annum (mtpa) of LNG, and 5mtpa of NGLs (LPG and condensate) from 3.5 billion (standard) cubic feet per day (bcf/d) of natural gas intake.

NLNG’s near-term expansion plans include construction of the seventh train to complement the existing six train structure, which when in operation will up the company’s total production capacity to 30 mtpa of LNG.

 

Olusola Bello