*Decision has unblocked hurdles against expansion, says Attah *It is a show of confidence in Nigeria – NNPC
Lagos — In a Nigerian oil and gas industry where there is little to cheer, the recent Final Investment Decision, FID, on the Nigerian Liquefied Natural Gas, NLNG, Train 7 project is a major cause for celebration.
Specifically, the NLNG shareholders, comprising the Federal Government of Nigeria, represented by the Nigerian National Petroleum Corporation, NNPC; Shell; Total; and Eni, took the FID on the project on December 27 to open the way for commencement of construction of the project, expected to last approximately five years with first Liquefied Natural gas, LNG, rundown expected in 2024.
The FID came 20 years after the first train of the NLNG came on stream and 12 years after the completion of the NLNG Train 6 in 2007, following which the target had shifted to the Train 7 project.
Industry experts say the agreement by the shareholders was a fitting way to end year 2019. They also said the action was a major vote of confidence in the industry, coming at a time some players are selling or contemplating selling their assets and leaving the country.
“It is an affirmation that Nigeria remains a prime foreign investment destination”, said the Group Managing Director of the NNPC, Mallam Mele Kyari.
The Train 7 project was on the drawing board for about 12 years with shareholders attributing the inability to reach the FID since then on inclement investment and operational environment.
Differences in corporate interest, it was gathered, also played a role in the delay. Indeed, it took several days of heated meetings before the shareholders finally arrived at the FID on December 27.
The milestone decision is of several significance to the oil and gas industry and to Nigeria. With the agreement, for instance, about $12 billion will flow into the Nigerian oil and gas sector, and this, Managing Director/Chief Executive Officer of Nigeria LNG, NLNG, Mr. Tony Attah, said will include the net cost of the project of about $5 billion and additional spend at the company’s operational base on Bonny Island in Rivers State.
Also, NNPC Group Managing Director, Mallam Kyari, said the project will generate $20 billion in revenue to the Federal Government in addition to creating 10,000 direct and 40,000 indirect jobs for the country. “This FID has opened the gateway for doing more great things. We will work with our partners to bring in more projects that will add value to this country in the upstream, and particularly in the gas processing sector,” he said.
Speaking in Abuja at the end of the shareholders’ meeting, where the decision on the FID was reached, Attah said the Train 7 project would grow NLNG’s production capacity from 22 million tonnes per annum to 30 million tonnes per annum.
He disclosed that the project would resuscitate most of the idle fabrication yards across the country and create about 40,000 direct and indirect jobs.
Decision has unblocked hurdles against expansion – Attah
He also said the FID had unblocked the hurdles hindering the actualisation of additional trains, up to Train 12, which is the ultimate target.
He said: “There are many hurdles which Train 7 has unblocked, and that is what I mean when I say history is about to repeat itself. The original ambition for NLNG as a company was just Trains 1 and 2, but on the back of Trains 1 and 2 FID, which perhaps took so long, it took 30 years actually, to get to those two trains; but once their FID was taken, we went to Trains 3,4,5, 6.
“I believe that history is repeating itself today and it is worth celebrating that Train 7 has unblocked many hurdles; Train 7 is the gate-opener and I believe that we would go to Trains 8,9,10,11 and 12.”
“Lots of fabrication yards that have been idle would kick back to life. That is, one of the biggest opportunities that this project brings first and foremost, it is creation of employment, and it then creates additional value for country.
“Today, we have paid more than $7 billion in taxes since we became taxpayers. We have issued more than $15 billion in dividends to government through the shareholdings by the NNPC, which is 49 per cent, and all the other shareholders, Shell, Total, Eni, comfortably enjoy dividends on an annual basis.
“Dividends would grow; taxes for Nigeria would grow; employment would grow, and most importantly, we will put Nigeria back on that global map of energy resources country through this project.”
Attah maintained that the Train 7 project was beyond domestic gas for the company, adding that it was a global response to what the global market had been doing in terms of gas.
He added: “In today’s reality, we are lagging behind as a company and as a country. We did a very basic analysis to compare resource to capacity and we just saw that the opportunities for Nigeria have not really started.
“We were just 24 months behind Qatar when we started in 1999, but today, Qatar has got 77 million tonnes and we have 22 million tonnes. Train 7 would add another eight million tonnes to take us to 30 million tonnes.
“Just when we thought we were ambitious to go to 30 million tonnes, Qatar wants to add 30 million tonnes to theirs. And that for us is a major reason to wake up to the reality that train 7 is no longer ambitious; not for NLNG, not for Nigeria, but on the back of this project, we expect to see, as the NNPC mentioned, 12,000 direct employment opportunities created by this project; but more importantly, additional indirect employment of more than 20,000.”
The shareholders of the NLNG are the Federal Government of Nigeria, represented by the Nigerian National Petroleum Corporation, NNPC, with 49 per cent shareholding; Shell with 25.6 per cent; Total Gaz Electricite Holdings, 15 per cent and Eni 10.4 per cent.
According to Chairman of the NLNG, Mr. Osobonye Longjohn, disclosed that the company would do all it can to see that it build more trains, especially to match its contemporaries.
“If our contemporaries are getting five trains at a go, what stops us from getting seven trains at a go? I want to assure the President and all Nigerians that we would do our utmost to match our contemporaries and we would do it,” he assured.
FID is a show of confidence in Nigeria – NNPC
Speaking in the same vein, Group Managing Director of the NNPC, Mallam Kyari, stated that the project was a reflection of renewed confidence of international investors, particularly NNPC partners, which it have known for long time; stating that their determination to continue investing in the country would help move the country and the relationship with the shareholders forward.
He said: “For us, it is a show of confidence in our country, and not only that, it is also a show of confidence on Mr. President’s determination to put value to this country and to lead the country with example, that would make investors put their money into this country.
“For NNPC, it is our desires met. We are convinced that doing things right and doing things transparently, with accountability to our shareholders, which include about 200 million Nigerians that we know. Doing this serves their interest; doing this brings value on the table; it creates employment, it creates prosperity for this country; and this is what we are known for and what we have promised to follow through.”
The NLNG, had in September 2019, announced that SCD Joint Venture, JV, Consortium, comprising Saipem of Italy, Japan’s Chiyoda and Daewoo of South Korea, has emerged the preferred bidder for its Liquefied Natural Gas, LNG, Train 7 project, and were awarded the contract to undertake the Engineering, Procurement and Construction, EPC, for the Train 7 project.
Boost from Gas Supply Agreement
The project also received a boost with the signing, in the final quarter of 2019, of gas supply agreement between the NLNG and major gas producers, which an indication all was set for the FID and take-off of the Train 7 project.
Speaking at the event, Country Chairman of Shell Companies in Nigeria and Managing Director of Shell Petroleum Development Company, SPDC, Mr. Osagie Okunbor, appreciated the NNPC boss for “his purposeful leadership, which saw the partners coming together to sign the Gas Supply Agreement”. He, however, urged the partners to look beyond Train 7, adding that it was time “to move into action”.
On his part, the Managing Director of Total Nigeria, who was represented by Mr. Patrick Olima, pledged the company’s commitment to making gas available for the NLNG and executing other big projects in the country.
The Managing Director of Nigerian Agip Oil Company, NAOC, who was represented by Mr. Massimiliano Bertona, also thanked Mallam Kyari “for the skillful way he drove the process leading up to the signing of the agreement” and pledged the commitment of his company to supplying gas to the NLNG.
The Managing Director of the Nigerian Petroleum Development Company, NPDC, Engr. Mansur Sambo, in his speech, said he was excited at the opportunity of the company joining the elite club of gas suppliers to NLNG and pledged the company’s commitment to meeting the terms of the agreement.
The Managing Director of Oando Plc, Mr. Wale Tinubu, on his part, expressed gratitude to the Federal Government for creating policies that encouraged indigenous companies like his to join the league of gas suppliers to NLNG.
Speaking on the buyer’s side of the transaction, the Managing Director of NLNG, Mr. Attah, described the event as a great moment for Nigeria as the gas supply would help consolidate Nigeria’s position in the global LNG market.
He, however, requested that more needed to be done to get the country to “fly on the wing of gas” in the face of the changing global energy dynamics, adding that NLNG was ready to build more trains if the gas-producing companies can supply the gas required.
The highpoint of the event was the signing of the Gas Supply Agreement by all the parties and the signing of Term Sheet for the development of Oil Mining Lease, OML, 144 by NNPC, SPDC, Total, NAOC, and Sunlink.
Bonny reacts to FID
A group known as G30 Ibani Voice, in its reaction to the Train 7 FID, hailed it as a major development for Bonny people and the nation. Founder and president of the group, Dr Fubara Dan-Jumbo, said the project holds huge opportunities for the people of Bonny.
The group commended the management and shareholders of NLNG for “mustering the needed resources and determination to take the all-important decision”, noting that the project will open up a new vista of opportunities for job creation and businesses which will boost the economy of not only Bonny but the nation as a whole.
He explained that the G30 Ibani Voice was a group of technocrats from Bonny Local Government Area of Rivers State, while urging the management of NLNG to ensure constructive engagement from all stakeholders.
“As G30 Ibani Voice, our ideals and principles are tended towards human capacity development. This is a major milestone opportunity for the Bonny people. 40,000 job spaces coming into Bonny Kingdom is major. Available statistics show that we have about 9,000 people in Bonny.
“So, if it is followed accordingly, every youth in Bonny, even those that are graduates and non-graduates and those who want to empower themselves by getting new skills to be gainfully employed, will benefit from the project. And this is what we want for our people even though we know that it is a temporary thing.”
“Apart from that, it is also going to bring about a lot of businesses in the area. It is going to empower a lot of entrepreneurs in the kingdom,” he said.
The group, however, cautioned Bonny youths against disruption of their educational pursuit in a bid to make money through the Train 7 project, warning that such move would be counterproductive for the progress and wellbeing of the community.
“While we are looking at all the things this project will bring, we need to also look at the negative side of the project and how to ensure that the education of our people remains intact.
“Our children should not say that the FID has been announced, and people who are in school should begin to drop out and say they want to go and work on the site. Our people should be very conscious about that,” Dan-Jumbo cautioned.
He added: “That also will affect our girls. They should not be dropping out because they hear that a lot of girls will be coming into the town and they will be making money based on prostitution. They should not drop out because it is a temporary project.
“The project has a start date and an end date. Once the end date comes, if they get themselves involved in this duration, they will have themselves to blame because they stopped heading up in education.”