-By Gideon Osaka
There is hope in the horizon that the much awaited take off of Nigeria Liquefied Natural Gas, NLNG, Train 7 will be achieved sooner than later.
This is coming on the heels of the latest NLNG talks with lenders to finance a $10 billion expansion. The company is discussing with the country’s top-10 lenders including Guaranty Trust Bank and Zenith Bank, to raise as much as $2 billion, and with foreign lenders and export-credit agencies for the balance, Chief Executive Officer Tony Attah said. The funds will go toward building the gas plant’s seventh train, expected to boost output by 40 percent. “We have done the financial market pitch to know who has capacity,” Attah said recently.
Nigeria LNG has appointed Guaranty Trust and Sumitomo Mitsui Banking Corporation as financial advisers for the fund raising that will be a combination of debt and equity. The seventh train is expected to cost as much as $7 billion to build, with another $3 billion going for gas-gathering projects and pipelines needed to feed the new unit. Nigeria is joining nations from U.S. to Australia in increasing output of the fastest-growing fossil fuel to help meet rising natural gas demand led by China. With the planned expansion, output is expected to reach 30 million tons a year when completed in five years, from the current 22 million tons. Nigeria had already lost its position as the fourth-biggest exporter, overtaken last year by the U.S. This year, American LNG is further expanding while Russia is also ramping up shipments from its Yamal LNG plant in the Arctic.
Nigeria LNG had moved closer to taking a final investment decision on the project when it named Saipem SpA, Chiyoda Corp. and Daewoo Engineering and Construction Company Limited as the successful bidders to build the new plant. The company signed a letter of intent for the engineering, procurement and construction, EPC, contracts with the builders, a key milestone toward a final investment decision. “Our ambition is to take that decision on October 31,” Attah said. The company’s plant on Bonny Island supplied more than 300 LNG cargoes last year including 51 spot sales. NLNG, as it is known, has signed sale and purchase agreements with existing customers to take the additional volumes from the new plant while it expects that aggregate market growth will be driven by demand from emerging markets, including new destinations such as Pakistan, Bangladesh, Jordan and Jamaica, the CEO said.
The CEO said that a re-marketing effort for volumes from its older trains 1, 2 and 3 that began in 2017 is now nearing a close and he expects bilateral agreements with new and existing buyers will be signed by October. LNG buyers are now increasingly shifting toward shorter contracts as more cargoes are now sold on the spot market, he said. About 32 percent of global LNG imports last year were on spot or short-term basis, according to GIIGNL, an industry body of importers.
“We see that kind of behaviour in the trains 1, 2 and 3 re-marketing where I can positively say the average tenure was about 10 years. Not many people want contracts for 20 years,” according to Attah.
Explaining the development of NLNG, Attah said ”Train-7 will move from Front End Engineering Design (FEED) to detailed design, construction, commission and delivery and this phase will attract almost $7bn with an addition of the upstream scope of $10bn which will boost the foreign direct investment profile of Nigeria.”
He pledged the company’s commitment to achieving the project within four to five-year period and hoped that it would sign the Final Investment Decision (FID) by the end of October 2019.
Meanwhile, the Executive Secretary of the Nigeria Content Development and Monitoring Board, NCDMB, Simbi Wabote, said that the $17 billion NLNG Train 7 project will create 40,000 jobs. He stated this during the signing of the Letter of Intent (LoI) for the Train-7 Engineering, Procurement and Construction (EPC) Contract between NLNG and the preferred consortium- SCD, which is constituted by three entities – Saipem, Chiyoda and Daewoo. Giving an insight into the opportunities, Wabote said “the NLNG Train-7 will deliver 100 per cent engineering of all non-cryogenic areas in-country. The total in-country engineering man-hours is set at 55 per cent which exceeds the minimum level stipulated in the NOGICD Act, in line with our resolve to push beyond the boundary of limitations.”
The schedule of the NOGICD Act set the minimum engineering man-hours for FEED and Detailed Engineering on LNG Facility at 50 percent. He stated further that the benefits of the Train 7 project will extend to site civil works on roads, piling, and jetties, 100 per cent local procurement of all LV and HV cables, non-cryogenic valves, protective paints and coatings, sacrificial anodes and many other direct procurements from our local manufacturing plants. The target, according to the Executive Secretary, is to assemble over 70 per cent of all non-cryogenic pumps and control valves in-country, while other spin-off opportunities include logistics, equipment leasing, insurance, hotels, office supplies, aviation, haulage and many more.