NLNG: How Train 7 will move Nigeria to next level
Nigeria is set to increase its number six global ranking in gas production and first in Africa with the recent Final Investment Decision (FID) for the Nigerian Liquefied Natural Gas (NLNG) Train 7 project last December 27, in Abuja.
The Train 7 Project, according to its promoters will increase NLNG production by 35 per cent and its competitiveness in the global LNG market.
The decision allows the expansion to increase the capacity of NLNG’s six-train plant from the extant 22 Million Tonnes Per Annum (MTPA) to 30 MTPA.
Group Managing Director of Nigerian National Petroleum Corporation (NNPC), a 49 per cent shareholder in NLNG, Mele Kyari, had on December 27, 2019, led other stakeholders to sign the much awaited FID of Train 7.
Though it took 12 years to come to fruition, the FID has no doubt set the country on a developmental progression going by the benefits to be derived there from.
The construction period after FID will last approximately five years with the first LNG rundown expected in 2024.
In terms of monetisation, Train 7 project will significantly raise the Nigeria LNG contributions to Nigeria’s income from the over $13 billion paid out as dividends in the last 13 years, and over $18 billion paid out on gas purchases from oil-producing companies.
It will also increase Nigeria’s overall earnings of over 70 per cent from Nigeria LNG, comprising 49 per cent dividend, 30 per cent company income tax, and other taxes and levies.
This was further confirmed by the Kyari, who stated that the FID marks a great day for Nigeria as all the partners in the project have resolved to proceed with a project that will ultimately deliver at least $20 billion of net revenue per annum for the federation and create about 40,000 indirect jobs to Nigerians.
“The significance of the FID is that there is renewed confidence by international investors, particularly the partners in the project, which have been in the country for long, to still agree to bring money back into this economy to move Nigeria and our relationship forward.
“It is a show of confidence in the strength of the Nigerian economy and the capacity of President Muhammadu Buhari to bring value to the country’s economy and create the environment to attract more foreign investment.
“Despite all the challenges, we are able to come together to make the decision to invest in this project. We are very proud to be Nigerian today. We know that this is delayed. But we are confident that it will work. Mr President’s directive is that we should take it to Train 12. “We are all committed to doing everything to take the next steps so that we can make further progress to realize Trains 8, 9, 10, 11 up to 12 as soon as possible. There is opportunity for this. There is a will to go ahead with this,” Mr Kyari said.
According to Tony Attah, MD/CEO of NLNG, “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”.
Project benefit
The Train 7 project will create over 12, 000 jobs during the peak of construction, while trade and commercial activities within the Niger Delta region will equally receive a boost with multiple spin-off effects in other sectors of the economy, increasing the number of jobs that will be generated over a six-year project window.
The project is also expected to help reduce restiveness in the Niger-Delta region by providing jobs, calling for more projects in Nigeria to change the socio-economic narrative in the country.
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.”
NLNG had said that, the project upon completion will support the Federal Government’s drive to diversify its revenue portfolio and generate more revenue from Nigeria’s proven gas reserves of about 202 Trillion Cubic Feet (Tcf).
The construction period after FID will last approximately five years with first LNG rundown expected in 2024.
Local content
Attah had said at the opening ceremony of the 9th Practical Nigerian Content Conference in Yenagoa, Bayelsa State, said that the relationship between NLNG and Nigerian Content Development and Monitoring Board (NCDMB) on the Train 7 project was that of a partnership for progress.
“We co-created the Nigerian Content Plan, working in harmony with the agency just to understand the interpretation of the law and then co-creating how we comply.
Overall, it’s all about consolidation and co-creating the future. I am proud to say in March 2019, we signed off the Nigerian Content Plan for Train 7 project, delivering 100 per cent Nigerian content in construction, production of cables, welding, valves, scaffolding, furniture, painting and medical. It is going to be 55 per cent of in-country engineering and procurement man-hours.”
Attah stated that the partnership with NCDMB has produced the very first business to business service level agreement (SLA) to operationalise the Nigerian Content law, adding that other collaborative efforts with NCDMB have led to huge gains for Nigerian Content especially in his Company’s BGT plus project in six of its vessels were replaced in 2017.
Domestic market
Though, Nigeria boasts of over 202 trillion cubic feet (tcf) of proven gas reserves, and an estimated additional 600 tcf of potential reserves. There are more than enough natural gas reserves for both domestic power generation and for export as the country’s Gas Master Plan enables export and robust utilisation of gas for domestic purposes.
NLNG is a key player in helping to realise the country’s goals on utilisation of its gas resources while its sustained operations on delivery of Train 7 is expected to assure Nigeria of: significant revenue generation, reduction in gas flaring, sustained domestic LPG supply, viable LNG supply for domestic need.
Others are; job opportunities and local capacity development aspart of efforts to build a better Nigeria.
Gas
Attah had in a presentation titled “Global Energy Transition: Which way forward Nigeria?” at the 2018 2nd West Africa International Petroleum Exhibition and Conference (WAIPEC) in Lagos said that the global energy landscape is changing with major concerns for the environment, such as global warming, and increasing demand for cleaner energy.
He remarked that with reduced appetite for crude oil as a dependable source of energy, gas is the best option for Nigeria in the future.
“The best bet for Nigeria is gas. It is available in abundance and three times cleaner than oil in terms of carbon content. Nigeria has to begin to think about the relevance of oil in the future.
Nigeria has to start to develop its gas resources in readiness for this future. Some critics say gas is not profitable but let me draw your attention to Qatar, a small fishing economy which was transformed from a GDP per capita of $2,000 in 1970 to a GDP per capita of $124, 000 in 2017 using gas.
“Gas can lift Nigeria, which is where NLNG comes in. NLNG is producing 22 Million Metric Tonnes Per Annum (MMTPA) but we are not resting on our oars. We want to construct a Train 7 that will increase our capacity to 30 MTPA. It is time for gas. It is time to unleash Nigeria’s potentials. That is how we can survive the future with increasing appetite for renewable energy.
“The thirst for cleaner energy is increasing and a lot of that has to do with increasing environment friendly policies. Countries like the United Kingdom, Sweden, Norway and many other countries are making moves to significantly reduce their carbon footprint. Take for example India, which aims for 40 per cent renewable energy by 2030. UK joins France to ban fossil-fuel cars by 2040. Norway aims for all new passenger cars and vans sold in 2025 to be zero-emission vehicles while Sweden has committed to 100 per cent renewable energy by 2040.”
“The world’s population will grow by an additional 2 billion people by 2050. They will need energy. Where will it come from? Most stakeholders in the future will not accept the carbon emission levels that are prevalent now. Renewable play a significant role in the growth of electricity, contributing almost 40 per cent of the growth in global power generation in 2016. By 2040, EIA estimates that 31 per cent of world electricity consumption would come from renewable, roughly half of which will be from hydropower, as wind and solar power will grow rapidly in the coming decades.”
He said many oil and gas executives are living in denial that the advent of renewable will not succeed or last, adding that indices do not support their denial position and that the world is moving on with renewable.
“The energy mix is fast changing and Nigeria has to come to terms with that. Nigeria’s proportion of global total proven oil reserves is 2.2 per cent and gas on the other hand is 2.8 per cent. What are we going to do with these resources? There is still coal in Enugu and all these fossil fuels will still exist in the future but will they be acceptable as a source of energy? I think that is the harsh reality we have to prepare for,” he said.
SOURCE: sunnewsonline.ng