As NLNG Plan Train-7 Project

The Nigeria Liquefied Natural Gas (NLNG) Train-7 project will expand the company’s production capacity from 22 million metric tonnes per annum (mtpa) to 30mtpa, writes Chineme Okafor

Recently in London, the Nigeria Liquefied Natural Gas Limited (NLNG) renewed its commitment to expand its production capacity by an additional liquefied natural gas (LNG) production line, the Train-7.

Coming about 11 years after it last built an LNG train on its Bonny Island operational hub, the firm revealed that it would be in the global financial market looking for $7 billion from potential investors to expand its operations from 22 million tonnes per annum (mtpa) to 30mtpa.

It said it had primed itself to take a Final Investment Decision (FID) later in 2018 on the Train-7, and in this regard doing all that was necessary to accomplish the plan.
Starting from September 1999, when it first shipped out the first LNG from Train-2 of its Bonny Island facility, to December 2007 when it last built Train-6, the NLNG had previously progressed with good speed building six trains within nine years.

These included the Train-1 in February 2000; Train-2 in September 1999; Train-3 in 2002; Trains 4 and 5 in November 2005 and February 2006; as well as Train-6 in December 2007.
It however stalled on this reportedly remarkable track and for about 11 years did nothing to take more of the market opportunities that opened up in LNG business across the world.

Notwithstanding, the company which is a private limited liability firm owned partly by the Nigerian government through the Nigerian National Petroleum Corporation (NNPC), which has 49 per cent shares in it; Shell Gas B.V. – 25.6 per cent; Total Gaz Electricite Holdings France – 15 per cent; and Eni International – 10.4 per cent, said in July in London that it was now ready for Train-7.

Doing first things first
But before it embarked on the Train-7 expansion project, it indicated it had to do the first things first, which included fully paying back without default about $5.45 billion taken from its shareholders to build the existing six LNG trains on its Bonny Island base.

At the London meeting to commemorate the repayment of the loan, the company also disclosed it awarded contracts for the Front End Engineering Design (FEED) of the Train 7 project to B7 JV Consortium and SCD JV Consortium. This it added was as an indication of its commitment to the expansion project.

To underline the depth of its commitment to Train-7, NLNG’s Managing Director, Mr. Tony Attah, stated that the funds being sought would cover construction of Train-7 and investment in Nigeria’s upstream gas sector to ensure the sustainability of feed-gas supply to its existing trains – 1 to 6 and the new Train-7.

“Let’s get this very clear. NLNG is a mid-stream company that has monetised over 5.96 trillion cubic feet (tcf) of associated gas which would have otherwise been flared thus helping to build a better Nigeria.

“However, what we are doing is not just looking to fund the expansion of the plant but also to ensure sustainability of feed-gas supply to the plant, for the continued success of NLNG.
“All of these align with our belief that gas is a catalyst for industrial and economic transformation which will position Nigeria to become a leading gas producing country,” Attah said.

He said the firm was confident of getting the funds based on its accomplishments in the global LNG business.
“The success story of the NLNG project is due to some key critical success factors which include the shareholding and governance structure of the company that has made the company an independent Incorporated Joint Venture, guaranteeing an independent board of directors, effective decision making as well as funding for its projects which is critical for the sustenance of this successful project.

“Over decades, the company has raised funds for its projects, from a combination of shareholders loans, internally generated revenue and third-party loans.
“In all of these financial ventures, NLNG demonstrated financial discipline and character by abiding by loan covenants, terms and conditions without a single breach or default, and we believe this position the company as a lenders delight,” he explained.

Hope rest on reported credibility
Knowing how much of work needed to be done to raise such huge fund, Attah, explained the NLNG would leverage its reported operational credibility in its search for investors for Train-7.
According to him, “Our financial credibility speaks for itself and we will be testing the financial market once again with our sustainability and expansion projects estimated at $7 billion.

“Raising $7 billion is no small feat; anywhere in the world, this will be a major event,” he admitted, adding, “therefore, we will be seeking support from the local and international financial institutions, our shareholders and the Nigerian government in bringing to reality the dreams of our founding fathers and achieving our vision of helping to build a better Nigeria.”

He equally indicated that the consolidated loan which had been repaid would be a major push factor for the NLNG in this regards, noting that it would send a strong message on its credibility.
Additionally, Attah, warned that for Nigeria to retain a good share of the global LNG market, it needed to be quick about the Train-7 project, adding, “Train 7 is the next big deal, we are coming back straight to the market.”

FEED agreements reached
Already, NLNG has awarded contracts for the Train-7 FEED to a consortia – B7 JV Consortium comprising American company KBR Inc., Technip of France and Japan Gas Corporation (JGC); as well as SCD JV Consortium, made up of Saipem of Italy, Japan’s Chiyoda and Daewoo of South Korea.

The signing of the contract documents for the FEED was done shortly after the loan repayment commemorative meeting in London, with the NLNG indicating this would pave the way for the Engineering, Procurement and Construction (EPC) pricing and bidding processes which are preconditions for Train-7 FID.

It also stated that it opted for a dual FEED process which would produce a Basic Design Engineering Package (BDEP) that will determine EPC pricing, and eventually bids to construct the train.
On this, Attah explained that: “The FEED is the most crucial part in the build-up to the actualisation of Train-7, after some delay and lost opportunities to reinforce Nigeria’s position prominently on the global energy map. Today’s event goes to show that Train-7 is alive.”

He said: “Typically, FEED takes about nine to 12 months, but we have explored another strategy for this project by adopting the dual FEED process which awards this crucial part of the Train-7 project to two prospective engineering consortia, instead of one contractor.

“What this does for us is it gives us a degree of freedom to start FEED and sometime after, EPC bidding, with both activities overlapping. We remain committed to taking FID as soon as these processes are complete.”

Train-7, a necessity
Attah, buttressed the need to have Train-7 come on stream as soon as possible for Nigeria retain its status and market share in the LNG business.
He explained that the growth trajectory of LNG in Nigeria has not been particularly fantastic especially with regards to the break in expanding the NLNG production capacity.

“The history of the LNG industry in Nigeria is chequered. After about 30 years of trying to get an LNG project going, in 1989 NLNG was incorporated and one FID after the other, six trains were built in quick succession, making us the fastest growing LNG company in the world at the time.
“But we lost steam just after 2007, while the rest of the world went past us with the development of their gas resources and the gain of greater market share.

“We started our LNG industry 24 months after Qatar, but Qatargas has attained a production capacity of 77mtpa with additional target of 30 per cent LNG production in the immediate future. I believe it is time to reset the narrative. It is time for gas revolution in Nigeria,” he noted.
Also, the Chairman of the NLNG Board, Dr. Osobonye LongJohn, in his remarks, said the FEED contracts signing ceremony was a visible start to the actualisation of the board’s vision for Train 7. He said the host communities of NLNG were equally in support of the Train 7 project.

Fortified from 2019 politics

Perhaps to assure potential investors of the reality of Train-7, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, hinted that the upcoming 2019 general elections would not derail Nigeria’s commitment to the project.

Kachikwu, had stated plans by NLNG shareholders which included the Nigerian National Petroleum Corporation (NNPC) standing in for the government, to reach FID on Train-7 by December 2018, would go on despite the country going into a general election in 2019 and the potential vagaries associated with such.

He said, “Nigeria LNG is always being insulated from politics, it doesn’t matter who is in government or what elections purposes are on. They’ve always been a well-run company, independent, strong shareholders, strong board, strong management, in many ways I think this island is insulated from the shenanigans of party politics and all that.

“What is more important however is that the president and the current government fully support them, they have been a good go-to point for us when there is problem. They’ve managed the resources that they hold for the government very well, they’ve been very accountable, very transparent.

“At a very critical moment of this regime, early 2015 when we needed help, we went there, that seed money was very essential at getting governors out of the difficulties we had, so, I know every government has always supported them but we have I think supported them a lot more and will continue to support them, so it really shouldn’t matter.”