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NLNG Drives N1.24trn Facility Upgrade Programme

Africa’s biggest gas liquefaction company, NLNG, is taking a long term view of the global gas market with an expansion and upgrade programmes that command investment of N1.239 trillion in 8.0 mtpa plant, six LNG carriers and a high capacity dry dock facility.

Sopuruchi Onwuka

Nigerian Liquefied Natural Gas (NLNG) Limited is driving a comprehensive facility expansion programme that would enable the company consolidate on its leadership position in Africa, raise its processing and transportation capacity as well as deepen Nigerian Content of the full business chain. The programme which includes liquefaction capacity expansion, tanker fleet upgrade and development of vessel maintenance dry dock in Lagos will require cumulative investment of princely $5.9 billion or N1.239 trillion. Part of the huge investment budget will however be borne by third party investors while the major cash haul is to be made at the company’s expansion projects involving planned seventh liquefaction train and six new liquefied natural gas (LNG) carriers expected to boost offtake capacity from enhance processing plants. Spokesman of the company, Mr. Tony Okonedo, whose public affairs team hosted media executives to lunch weekend, declared that the highly awaited final investment decision (FID) for NLNG Train VII (NLNG-7) would soon be announced by key shareholders of the company.

The $2.5 billion (N525 billion) NLNG-7 is conceived to raise the liquefaction capacity of the company by 8.0 million tonnes per annum (mtpa) from current 22 mtpa to 30 mtpa. It is one of the three LNG projects stagnated in the government’s gas policy swings as domestic demand pressure compelled retrieval of attention from export projects. Other LNG projects in the country including the Brass LNG and Olokola LNG projects also suffered the same fate with the Olokola project feared to have been fatally impacted as key investment partners disperse in frustration. At several platforms for policy debate, erstwhile and current Managing Directors of NLNG have consistently argued that gas liquefaction and export projects are not mutually exclusive to domestic gas supply projects.

Current Managing Director of NLNG, Mr. Babs Omotowa, had at conferences warned that Nigeria was losing niche opportunities in a tightening global gas market space where, according to him, production boom from new exporters and new energy technologies threaten narrower windows. He argued that players in Nigeria desperately need gas export revenue to fund domestic gas supply obligations handed down to them by government. He made it clear that a policy mix that allows export projects to provide funding support for domestic gas projects would be in the best interest of stakeholders in the Nigerian upstream petroleum industry where gas monetization and flare reduction are traditional issues. Mr. Okonedo stated that both government and private stakeholders in NLNG have agreed to progress with the seventh train of the company, adding that interest remains to get the shareholders to reach FID as quickly as possible.

“Significant progress has been made towards FID,” he said, adding that discussions on the seventh train has continued to gain more space as investors begin to respond to opportunities presented by the current environment for expansion. The additional production capacity, he explained, is expected to translate to increased revenue and sundry non-revenue economic dividends to stakeholders of the company, adding that the new plant is conceived to pass through a construction stage of three years before commissioning.Offtake from the complex would be enhanced with the delivery of six new LNG carriers later in the year by the Bonny Gas Transport Limited (BGTL), the transport subsidiary of the company.

According to him, the company had invested some $1.6 billion (N336 billion) in the building of the vessels, deploying project models that also open contract opportunities that enable three Nigerian companies to take some $10 million (N2.1 billion) job scope in the vessel building. He said the three companies: Berger Paints, Kabelmetal, and Zennel Furniture have since started exploring export opportunities following their exposure with Korean Samsung and Hyundai industries respectively. Again, he said, NLNG is promoting development of $1.8 billion (N378 billion) world class dry dock facility in Nigeria thatb would be the biggest of its kind in Africa and rank among the best in the whole world.

The dry dock facility which is to be located in Badagry, Lagos State, is to provide in-country maintenance services of the fleet on BGTL and other large vessel operators that sail across Africa’s territorial waters. Already, Mr. Okonedo said, Samsung Heavy Industries (SHI) and compatriot Hyundai Heavy Industries (HHI) have jointly committed $30 million (N6.3 billion) to the dry dosck project while lead investors are in the horizon to seal an FID in the near future. The dry dock facility, according to NLNG, is expected to take marine and land capture area the size of some 185 football fields and take large ocean going tankers and merchant vessels of sizes that never berthed in ant port facility in Africa.

The economic benefits of the entire facility development programme by NLNG is incalculable, Mr. Okonedo stated, adding that construction phase of NLNG-7 is estimated to generate over 17,000 jobs while additional capacity at the complex holds potential for significant revenue upside for all stakeholders. Bigger job opportunity is expected from the dry dock development with both foreign and local contractors planned to handle some for the job schedules during the construction, installation and operation phases. Lead investors in the project, he said, are expected to commit to local content compliance in the entire project stages, On the shipping side, significant local content packages, according to Mr. Okonedo, have also been worked out in a strategy that would ensure participation of local companies in supplies and services.

It was not clear however whether any of the modules would be fabricated or assembled in-country as in the policy guiding building of Floating Production, Storage and Offloading (FPSO) vessels in the upstream petroleum industry. According to him, NLNG’s vessels are primarily manned by indigenous crew in line with company’s internal policy. He added that the NLNG Ship Management Limited (NSML) is positioned to provide indigenous crew for all the company’s tankers. The company stated that the six new vessels expected by the last quarter of the year would be part of a conceived fleet upgrade programme expected to replace some ageing vessels and increase the fleet’s cumulative offtake capacity. The entire programme, according to Mr. Okonedo, fits into the company’s culture alignment initiative designed to optimize cost, build capacity, enhance asset integrity and optimize process capacity availability in the company’s plant complex.

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