Chineme Okafor assesses the intervention of the Nigeria Liquefied Natural Gas Limited in addressing environmental issues in the country, in the past 30 years
About 31 years ago, exactly on June 23, 1988, the conversation about climate change became a national issue in the United States when the country’s Senate Energy and Natural Resources Committee entertained a landmark testimony on the issue from Dr. James Hansen, then director of the National Aeronautics and Space Administration (NASA) Institute for Space Studies.
In his testimony, Hansen stated that, “global warming has reached a level such that we can ascribe with a high degree of confidence a cause-and-effect relationship between the greenhouse effect and observed warming.”
He added, “in my opinion, the greenhouse effect has been detected, and it is changing our climate now,” and made it clear that climate change posed a threat to humanity.
Hansen equally attributed the phenomenon to human exploitation of carbon energy sources including oil and gas, and from then on, the conversation about climate change took off across the globe.
A year after Hansen’s landmark testimony to the US Senate, Nigeria enunciated a law today known as the NLNG Act to harness and monetise its natural gas resources.
Within the operational context of the Act, the NLNG was principally set up to convert and export associated gas as LNG. It has however become Nigeria’s largest response to global warming, reportedly reducing the country’s flare profile from 65 to 25 per cent so far.
In 2018, the World Bank reported that Nigeria flared an equivalent of 7.4 billion cubic metres (bcm) of gas to earn the seventh spot in the world’s highest gas flaring countries. Russia, according to the World Bank’s Global Gas Flaring Reduction Partnership (GGFR) flared 21.3bcm within the period.
These countries according to the GGFR contribute immensely to climate change by releasing millions of tons of carbon to the atmosphere.
But for the NLNG…
Nigeria would have in the last 20 years flared approximately 180.5bcm or 6.37 trillion cubic feet (Tcf) of Associated Gas (AG) to the atmosphere.
Thus, by converting this volume of gas to liquefied natural gas (LNG) and natural gas liquids (NGLs), the NLNG in its 2019 Facts and Figures report, stated that it kept an equivalent of 2,310 LNG and NGL cargoes from been flared and rather converted to better use. This, from experts’ considerations represented significant wins for the global environment even though the originally pronounced intention for the NLNG was to monetise flared gas.
From its existing six trains, the NLNG indicated that it could produce up to 22 million tonnes per annum (mtpa) of LNG, and 5mtpa of NGLs. It also informed that an equivalent of 3.5 billion standard cubic feet per day (bcf/d) of natural gas were consumed by its six plants which plans for further expansion have lately gained immense traction.
“Plans for building Train-7 that will lift the total production capacity to 30mtpa of LNG are currently progressing with some preliminary early site preparation work initiated. Further work awaits FID by the shareholders,” said the NLNG in the report, to further suggest an upsurge in Nigeria’s contribution to tackling global warming.
Monetisation of gas
Over the 20-year operational period, the NLNG explained that it had paid Joint Venture (JV) feed gas suppliers from oil fields in Nigeria up to $28 billion with an equivalent of 60 per cent of such payment getting into the pockets of Nigeria’s federal government which is the largest shareholder in the venture through the Nigerian National Petroleum Corporation (NNPC).
It equally reported that up to $36 billion, out of which 49 per cent went to the federal government, had been paid as dividends to its shareholders.
“As a good corporate citizen, NLNG also contributes to national wealth and the economic wellbeing of states in which it operates, by paying all applicable taxes and tariffs.
“In 2018, the company’s corporate income tax paid to the federal government of Nigeria amounted to about $864 million, over 40 per cent of what was paid in 2017,” it noted to buttress the benefits the conversion of otherwise flared gas has so far brought to Nigeria.
Overall however, it indicated that since 2011, when its legally-backed tax holiday ended, it had paid corporate income tax worth $5,656,646,965.99 to the government, in the fraction of $65.080 million in 2011; $107.037 million in 2012; $118.592 million in 2013; $1.402 billion in 2014; $2.169 billion in 2015; $323.273 million in 2016; $606.668 million in 2017; and then $864.074 million in 2018.
Beyond monetising otherwise flared gas, NLNG as well stated that its construction of the six trains ensured an inflow of Foreign Direct Investment (FDI) into Nigeria and that its assets were now worth about $16 billion.
It also explained that since 2008, it had contributed about four per cent of Nigeria’s annual Gross Domestic Product (GDP). It equally highlighted its job creation prowess and comprehensive support for the application of Nigeria’s local content law in its operations.
“More than 12,000 jobs each construction year. Overall, the major sub-contractors employed over 18,000 Nigerians in technical jobs for the Base Project. Through each Nigerian Content plan for its contracts, NLNG has promoted the development and employment of Nigerian manpower,” it explained.
Having spent the first 30 years setting up and growing its production capacity to 22mtpa, cutting down Nigeria’s gas flare rate to 25 per cent, and yielding immense financial and material returns to its shareholders and stakeholders, the NLNG recently announced its plan for the years ahead of it.
“It is about 1989 when the NLNG was incorporated and 1999 when the first gas cargo was exported from Bonny. Another 30 years starts now and here in this palace. The next 30 years will even see more successes between us,” said the Managing Director of NLNG, Mr. Tony Attah, when he visited the king of Bonny kingdom, the Amanyanabo of Bonny Kingdom, King Edward Pepple, on the occasion of the company’s 30th anniversary.
Attah, noted amongst others that: “We recorded many successes in our partnership with the Bonny people. The Bonny Utility Company was set up to give power to the Bonny Island which has ensured 95 per cent power supply stability in the kingdom; the only place in Nigeria with such record.
“Bonny Vocational Centre has pursued youth empowerment with huge success. Scholarships have been awarded to the kingdom.”
Beyond the company’s future plans for its host community, Attah, equally explained that it was going on an expansion drive which would see it add another train to its production capacity.
“Train-7. It is the beginning of the next 30 years. We were number four but now number seven due to the delay in building Train-7. If we do nothing, we will slip to number 10,” he stated.
He had equally told journalists at a meeting in Abuja that plans for Train-7 were in top gear and that up to $10 billion worth of FDI was expected into Nigeria in the next five years from the capacity expansion by an additional eight metric tonnes per annum.
“Today, we are here to progress another milestone by issuing a Letter of Intent to award the Engineering, Procurement and Construction (EPC) Contract for Train 7 project to the preferred bidder SCD JV Consortium. As we issue this Letter of Intent today, we will be even closer to signing of the FID.
“Train 7 is our sure way to attaining that ambition with 35 per cent increase in our production capacity, from 22MTPA to 30MTPA. We are working to achieve this project within four to five years after we sign the FID if we must stay competitive and profitable in the global market.
“Our greater joy is that Train 7 at construction phase will attract an investment of over $7 billion, boost Foreign Direct Investment (FDI) profile of the country and provide about 10,000 jobs during the construction stage,” Attah added.
And, while it pursues its Train 7 expansion, the NLNG assured it would remain committed to addressing climate change challenges through the implementation of its Green House Gas (GHG) and energy management plan.