Why NLNG Train 7 is no longer ambitious for Nigeria – MD

Tony Attah, MD, NLNG
Tony Attah, MD, NLNG

After a week’s delay, partners to the Nigeria Liquefied Natural Gas (NLNG) Limited last Friday finally sealed the final investment decision (FID) to construct Train 7 of the project initiated to raise its production capacity from the current 22 million metric tonnes per annum to 30 million MTPA by 2024.

At the end of the event, the Managing Director of the NLNG, Tony Attah, and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, spoke on the significance of the project to Nigeria and the global gas market. BUSINESS & ECONOMY EDITOR, BASSEY UDO, was there.

Excerpts

QUES: The journey to the final investment decision (FID) on Train 7 of the Nigeria LNG has been very long and tortuous. What is the guarantee this project will be realized on schedule and within budget?

ATTAH: First, let me thank the shareholders and the Board of Directors of our company, who, with the support of our partners, led by the Federal Government of Nigeria through the Nigerian National Petroleum Corporation (NNPC), under the able leadership of President Muhammadu Buhari, we are able to take the bold decision to go forward with the construction of Train 7 of the Nigeria LNG project.

We have been pushing for long to get to the decision over the last 14 or so years. It is important to restate that between 2000 and 2006, Nigeria LNG was the fastest growing LNG company in the world.

Every eighteen months, the management of the company was adding a new production train to its capacity, to the point where the sixth train was added to the base project.

From the sixth train, we have struggled for several years to move on to the seventh train. But, it must be on record that when the management and partners visited the president to inform him about the resolve to proceed with this project, and to seek his support for Train 7, he expressed shock that we were yet to surpass Train 7.

Being part of the project in the 1980s, the president said he had expected the company to be on the construction of Train 12 by now.

That really inspired our management and partners to go for this, because we see history about to repeat itself.

When the Nigeria LNG was set up, the ambition was to build two trains only. But, we went from two trains to six production trains.

That is partly why we are very encouraged today with the milestone we have achieved. We believe that the final investment decision (FID) on Train 7 today is a gate opener for the subsequent trains that are to follow.

With the support of our Chairman, Chief OR LongJohn, and our directors, we believe that Train 7 of the NLNG project will surely be a gate opener for what will be Trains 8, 9, 10, 11 and ultimately 12, which the president wants us to be at. We are very happy to get to this juncture today.

QUES: As you said, the ambition is to raise the capacity of the NLNG project to Train 12. If it took the partners so long to reach a decision to invest in Train 7, how is it going to be easy to take the decision to grow capacity to Train 12 quicker than it has taken now?

ATTAH: But, like I said, there were many hurdles, which Train 7 final investment decision has unblocked. That’s what I meant by history about to repeat itself.

The original ambition for Nigeria LNG as a company was just to construct Trains 1 and 2. But, on the back of Trains 1 and 2 FID, which took 30 years, we learned a lot.

Once the decisions were taken, we proceeded to build Trains 4, 5 and 6. So, I believe that history is repeating itself today.

That why every Nigerian should celebrate being part of the history that Train 7 has been, as the gate opener. I have no doubt that with the experience, we will get to Trains 8, 9, 10, 11 and 12 quicker than we have done.

QUES: Beyond its impact on domestic gas supply, what is the significance of this project on the global gas market?

ATTAH: Train 7 project is beyond domestic gas supply for the Nigeria LNG. It is really a global response to what the market has been doing.

Obviously, in today’s reality, the Nigeria LNG is lagging behind, both as a company and as a country. We have done the basic analysis, to compare resources with capacity, and we found out that opportunities for Nigeria have not even started, quite frankly.

Nigeria was just 24 months behind Qatar when the Nigeria LNG started in 1999. But, today Qatar is on 77 million metric tonnes per annum production capacity, while Nigeria LNG is on 22 million metric tonnes per annum.

So, Train 7 will add another 8 million metric tonnes to take the company to 30 million metric tonnes per annum.

Then, just when we thought we were very ambitious to go to 30 million metric tonnes, Qatar again wants to add another 30 million metric tonnes to its capacity.

That for us is a major reason for Nigeria LNG to wake to the reality that Train 7 is no longer ambitious; not for Nigeria LNG; not for Nigeria.

The FID we have taken today will expand the Nigeria LNG production capacity by 35 per cent and boost Nigeria’s competitiveness in the global LNG market.

The FID will allow the Nigeria LNG to increase its six-train plant from capacity from 22 million tonnes per annum (MTPA) to 30 MTPA.

Train 7 is the crux of a growth agenda, which will ensure Nigeria LNG’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 fulfillment of its vision of ‘being a global company, helping to build a better Nigeria.

With the award of contracts for the engineering, procurement and construction activities to follow the closure of the bank and Export Credit Agency (ECA) financing, and the finalization of some key supporting commercial agreements are expected in early 2020

But, on the back of this project, partners expect to see at least 12,000 direct employment opportunities created, and more importantly additional indirect employment of about 40,000.

Lots of fabrication yards that have been idle will kick back to life. That is one of the biggest opportunities that this project brings, first and foremost, before creating additional value for the country.

Today, the Nigeria LNG has paid more than $7 billion in taxes since it became a taxpayer. We have issued more $15 billion in dividend to the government through the shareholding by the NNPC’s equity of 49 per cent and all the other shareholders, including Shell, Total and ENI on annual basis.

So, with this project, dividend payouts will grow, taxes for Nigeria will grow, employment will grow, but most importantly it will put Nigeria back on the global map of energy resource country.

QUES: After the initial delay in securing the FID, how do you feel today about the decision by the partners to the project?

KYARI: The taking of the final investment decision 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 at 12,000 direct and 40,000 indirect jobs to Nigerians.

The significance of the FID is that there is a 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 investments.

For NNPC, the FID has convinced us that doing things right transparently and with accountability to its shareholders, including over 200 million Nigerians is the way forward to create value, prosperity and employment for the economy.

The FID on NLNG Train 7 has opened a gateway for greater things to come in the economy in the immediate future.

It has shown that with NNPC and its partners, they are committed to working together to bring more projects in the upstream sector of the oil and gas sector as well as the midstream sector to grow the country’s economy.

Despite all the challenges, the FID has shown we are able to come together to take the decision to invest in this project.

We are very proud to be Nigerians today. We know that this decision 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 an opportunity for this. There is a will to go ahead with this. That is why I thank all our partners who made this happen today


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