28 January 2016, Sweetcrude, Abuja — Chairman, Brass Liquefied Natural Gas Limited, LNG, Mr. Jackson Gaius-Obaseki, has stated that the company has undertaken a review of the project in the light of the low crude oil price, so as to bring about a drastic reduction in its capital expenditure (CAPEX)
Addressing shareholders at the company’s 11th Annual General meeting in Abuja, Gaius-Obaseki, stated that the Pre-Front End Engineering Design (Pre-FEED) Concept Evaluation Study (PFCES) has been completed and the final report submitted to the company, while the feed gas sensitivity scenarios has been completed and the report submitted to the company.
He said, “We are not oblivious of the price collapse in the crude oil market, which must have caused concerns about the project viability and ability of the shareholders to execute same. In the light of this, management has taken steps to review the project concept with a view to drastically reviewing the capital expenditure (CAPEX).
“Report presented to the Board on this subject is very encouraging and makes the project realizable even in the current environment; without compromising the integrity of the project.”
He also stated that the project site security contract for pre-FID has been awarded, while the Enterprise Resource Planning (ERP), a robust tool that will automate and create seamless processes within the company has been completed.
Gaius-Obaseki further stated that 2015 was an eventful one for Brass LNG, especially as it continues to forge tirelessly towards attaining FID on the project.
He identified some of the companies’ achievements in 2015 to include the successful attainment of cost optimization.
According to him, this was attained through the renegotiation of contract rates, commercial terms, scope of works and reclassification of contracts and purchase orders from dollars to naira denominations in compliance with the Central Bank of Nigeria’s (CBN) directive.
Continuing, Gaius-Obaseki noted that during the conceptualization of the Brass LNG project, the price of crude oil was low, at almost the same level as the price of oil currently, before the price soared.
He said, “Shareholders were concerned because of the price of executing the project and that concern got heightened when of course, there was the collapse of the price in the crude oil market. But the company has taken the initiative which has now led to the once plus one strategy.
“They said that instead of taking Final Investment Decision, FID, on the two trains, take one train and as you start construction, you go for the other. But when you are doing the first one, you still make provision for things you would use in the second one. You don’t need to re-mobilise anyway, and quite a number of things.”