NLNG: Monetising Nigeria’s Gas Resource

The Nigerian Liquefied Natural Gas (NLNG),
no doubt, is the single largest industrial complex in the sub-Saharan Africa
and indeed, a beacon to the rest of Africa. It is in no small way the
actualisation of the dream of having a strong LNG company that will monetise
the huge gas resource which Nigeria is blessed with.

That Nigeria is one of the world’s gas hubs
is an understatement as according to the Executive Director, Gas and Power, Dr.
David Ige, the country’s gas potential stands at a proven  reserves of about 187 trillion cubic feet,
and an undiscovered potential as high as about 600 trillion cubic feet.

Therefore, it was no surprise that, with
its committed leadership and remarkable workforce, it grew “rapidly from its
well-earned reputation as the world’s fastest growing LNG plant to a stable
production operation with buyers across the Atlantic Basin and Asia Pacific
regions, sending one cargo of LNG everyday down the Bonny River to buyers all
over the world safely and timely,” using the words of NLNG’s Managing Director,
Mr. Babs Omotowa.

The snag, however, is the current 22
million tonnes per annum and up to 5 million tonnes per annum of Natural Gas
Liquids (NGL) capacity of the 6-train facility is far below expectation.

Nigeria LNG used to have 10 per cent market share world-wide but it has slipped to 8 per cent. And countries like Qatar and Australia have taken the front roll in the queue. The reason, according to Chief Ernet Shonekan, is because these countries with much lesser reserves than Nigeria, have moved their output from 20 million metric tonnes range to 80 and 81 million metric tonnes, respectively, while NLNG is stuck at 22 million metric tonnes.

Shonekan added that there was a serious
threat for further erosion to NLNG’s market share by big players coming into
the market if nothing was done quickly.

“In effect, if the market becomes saturated
without gas from Nigeria we shall never be able to monetise our gas and may
still be flaring for sometime into the considerable future,” the former head of
state stressed.

Urging the Federal Government to immediately
give the approval for immediate take off of train-seven facility which would
raise production to about 30 million tonnes of NLG, he said the LNG market was
tightening up as other countries were not staying idle, so do not have the
luxury of deferring major decisions.

He noted that “the United States, formerly
a major LNG export destination, will become a net LNG exporter by 2016,
starting at 1.1 billion cubic feet per day and rising to 2.2 bcf/d in 2019.

“Australia has 10 fully sanctioned LNG
projects with a total of 20 trains, 81 million tonnes per annum (mtpa) of
capacity and  $215 billion worth of final
investment decision.

“China and US will soon become major
exporters of shale gas. Chinese reserves are estimated at 1.275 trillion cubic
metres.

“Mozambique will next year take a final
investment decision to build a two-train facility for its recent gas finds
offshore Mozambique.

“Australia has only 60 per cent of
Nigeria’s reserves. Yet, the country is building LNG plants with capacity for
80 million metric tonnes. And what is more? Australia generates 265,000 mega-
watts of electricity.

He commended government’s effort over Brass
LNG which is about taking final investment decision for 20 million metric
tonnes and OK LNG, in consideration for 2014 but was quick to add that it was
grossly inadequate.

Shonekan explained that “with more gas
reserves than Australia, we can’t constrain ourselves to less than half of
their output. Also, it is almost a shame that with more gas reserves, we
produce less than 5,000 megawatts of power compared to Australia’s 265,000
mega-watts.”

He said the argument that gas export should
wait for gas-to-power projects was unacceptable as with a gas reserve of 187
tcf, there was more than enough gas for every project in the country.

His words: I find it unacceptable, the
argument that gas export should wait for gas-to-power projects. With a gas
reserve of 187 tcf, there is more than enough gas for every project in Nigeria.
It must also be noted that domestic gas and export gas are not in competition.
We must also prove to the world that we are a country that is capable of doing
more than one project at a time. We are competent adults capable of taking
right decisions and making the right investment for our future.”

According to industry watchers, the take
off of the seventh train of the NLNG plant will bring in Foreign Direct
Investment (FDI) of well over $8 billion and to some extent reduce gas flare
which Shonekan describes as “continues to literally pour money into flames by flaring
gas.”

The take off of Train-Seven will bring in
additional $2.2 billion annual dividend to the country and provide about 10,000
jobs as the company since its establishment in Bonny has provided over 2,000
jobs at each construction year and at the peak of creating18,000 jobs.

Nigeria LNG’s managing director has
attributed the inability of the country to raise its LNG production to 52
million metric tonnes per annum to the delay in taking investment decisions by
government on NLNG Train Seven, the Brass LNG and OK LNG projects.

It is, therefore, imperative for government
to act now and take the proper investment decision that would make the country
regain its position and remain the beacon of hope it has always been to the
rest of Africa.

The country does not have the luxury of
deferring taking action on especially the Train-Seven facility of the NLNG. And
we want to believe the Petroleum Minister, Mrs. Diezani Alison Madueke meant
every word of it when she said at an award ceremony in Howard University, United
States recently that the nation’s capacity in LNG production would increase to
46 metric tonnes annually. The world, in particular Nigerians are watching.

Vivian-Peace Nwinaene