NLNG’s Year-to-date Gas Delivery Gap Worsens at 1.3bcf Due to Feedstock Supply Constraints

*Decries missed opportunities across Nigeria’s gas value chain

Peter Uzoho

The Nigerian Liquefied Natural Gas Limited (NLNG) has recorded 37.5 per cent year-to-date gas delivery gap, translating to about 1.3 billion cubic feet of gas (bcf) deficit, with negative implications on both the company’s export and domestic gas delivery obligations as well as revenues.
The Deputy Managing Director of NLNG, Mr. Olalekan Ogunleye, disclosed this during a panel session at the just-concluded Practical Nigerian Content Forum (PNC) in Uyo, Akwa Ibom State, where he also lamented that Nigeria missed a lot of opportunities across the upstream, midstream and downstream gas value chains.

Ogunleye said at the moment, the NLNG was only able to deliver 62.5 per cent of the 3.5bcf gas requirement in its six-trained 22 million tons per annum (mtpa) processing plant in Bonny Island, Rivers State.

THISDAY had exclusively reported in August that the NLNG had suffered $7 billion year-to-date revenue loss due to inadequate gas supply and under-capacity production at the company’s processing plant, a situation caused by the shutdown of major oil and gas pipelines, particularly the Trans-Niger Pipeline (TNP).
The company’s General Manager, Production, Mr. Adeleye Falade, had while speaking at an energy conference in Lagos, said the company’s production was trending at 99.4 per cent year-to-date availability while utilisation hovered around 68 per cent.
He had explained to the audience that the data between the 99.4 per cent availability and the 68 per cent utilisation at the time was equivalent to almost $7 billion revenue.

However, with the 62.5 per cent year-to-date available gas delivery disclosed by the firm’s deputy managing director, NLNG’s gas delivery has now fallen by 5.5 per cent from the 68 per cent reported in August.
“So for us as Nigeria LNG, it’s not just us, we see a lot of missed opportunities. Our train 1 to 6 gas requirement is about 3.5bcf of gas. Year-to-date, we have a gas delivery gap of about 37.5 per cent, only 62.5 per cent is our gas supply,” Ogunleye said.

He added that, “there are missed opportunities everywhere you look in the value chain, whether it’s upstream, midstream or downstream in terms of what can be accomplished commercially at a time that the shareholders, the country, we all need the funds.
“So it’s critical that we step up our collaboration to address this issue because it’s not just an NLNG issue. It’s an issue for everyone. It’s also domestic. There are also issues with gas supply to domestic market and the challenges are known.”

He said in the last two decades, there had been priority attention on gas and gas matters, starting with the Gas Master Plan and the current Decade of Gas agenda, noting that there was virtual unanimity amongst all stakeholders on gas development and the potential for gas to unlock economic development.
He said it was also clear that a lot of progress had been made around enabling policies in the oil and gas industry, particularly with the sanctioning of the Petroleum Industry Act (PIA).

Noting that the industry still has security challenges, Ogunleye added that there was significant cooperation by all actors to address the security challenges.
While observing that the country and the oil and gas industry were not where they should be, the NLNG official stressed the need for all stakeholders to differentiate between efforts and outcome -tracking effort and linking same with outcome. He stressed that participants must step up actions around that.
In the area of security, Ogunleye said industry stakeholders needed to start focusing on outcome, pointing out that the Nigerian National Petroleum Company Limited (NNPC) and the federal government were doing a lot to resolve that.

“We need to double down as of what the security agencies are doing. We need to leverage on intelligence gathering, we need to leverage on technology and it can be done. And more importantly, we need to understand that security is the responsibility of everyone and that it’s something that everybody is losing to.
“The security has to be effectively addressed and we must be tracking not just the efforts but their outcomes because you can track gas production, you can track oil production. And we need our communities to step up their partnership by providing information, by supporting the security agencies,” he said.
He stressed the need to incentivise investments in the country considering the fact that gas projects were highly capital projects and cost of fund in the domestic market now an issue still needed to be addressed.

According to Ogunleye, “we need to remove the blockages and make sure that we’re incentivising gas development and attracting foreign investments, and the way to do it is, we need to embrace decarbonisation, we need to adopt ESG standard and make sure that our projects are attractive from a financing point of view.

“Ease of doing business: We’ve talked about this a bit today. It’s important to understand that the ease of doing business is an issue that we must wrestle down because Nigeria has to be that hub of gas-based investment and unless we deal with value attack, multi agencies and all these constraints, it’s going to be a challenge.”

Commenting further on the missed opportunities in the country, Ogunleye cited the now-forgotten multi-billion-dollar Brass and Olokola liquefied natural gas (LNG) projects that would have added significant value to the country if they had been completed and production started.
“Most of us on this panel were involved to some extent in the Brass LNG, in OK LNG. They are mega billion projects that have struggled till date without taking FID.

“If today, we had three LNG projects in Nigeria, we can only imagine what that would deliver in terms of Nigerian content opportunity, value to shareholders, etc. So there is no-do-nothing option. We must come together; we must start tracking outcomes. As for Nigeria LNG, we are cooperating with all our shareholders and stakeholders,” Ogunleye added. 

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