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Hope Rises for NLNG Train 7, as NNPC, NLNG Seal $2.5bn Gas Supply Deal

-By Gideon Osaka

The long wait for the take-off of Nigeria Liquefied Natural Gas, NLNG Train 7 may be over as indications emerged that the final investment decision, FID, may be made early November.

This is coming as the Nigerian National Petroleum Corporation, NNPC, has challenged shareholders to work very quickly towards expanding the production capacity of the company beyond Train 7 to take advantage of developments in the global LNG market.

Valuechain gathered that a letter of intent for the engineering, procurement, and construction (EPC) contract with SCD JV Consortium to build a seventh train at the plant has been signed.

Mallam Mele Kyari, Group Managing Director of NNPC, gave the indication in Abuja, during the signing ceremony of a $2.5-billion pre-payment agreement between NNPC and NLNG for upstream gas development projects to supply gas to NLNG Trains 1 – 6. The signing of the gas deal was to ensure that there was constant gas supply to the plants.

Speaking on the significance of the agreement, the GMD explained that it would help to resolve the issues around gas supply to Trains 1 – 6, stressing that there was the need to fast-track action on the process of bringing more trains on stream.

“Here at NNPC, we are thinking beyond Train 7,” Kyari said, noting that though NLNG had been a huge success as a company, it must go beyond its current achievements and initiate other viable projects capable of generating a better return on investment.

“Actually, our thinking should be on what else we can do or what other projects we can work on as quickly as possible to take advantage of the enormous potential in-country. There is also a need for us to take advantage of what is happening in the global market and do things very differently. There are opportunities there and our company must move into those locations and we must move fast,” he said.

Kyari also said that the pre-payment gas supply agreement was a milestone that aligned with the Federal Government’s aspirations of monetising the nation’s enormous gas resources, protecting the Federation’s investment in the NLNG, ensuring full capacity utilisation (22mtpa LNG and 5mtpa NGLs) of Trains 1-6 plants, generating employment, and providing new vistas of growth opportunities in the nation’s LNG sector.

Also speaking, Tony Attah, Managing Director of NLNG, stated that the signing of the gas supply pre-payment agreement was a significant step towards ensuring the company’s business sustainability and competitiveness.

He called for support to ensure that the Final Investment Decision on the Train 7 Project was taken this year without fail, adding that the project was no longer an ambitious one in the light of developments in the global LNG market.

The highpoint of the occasion was the signing of the gas supply pre-payment agreement witnessed by the country chairman of Shell Companies in Nigeria, Osagie Okunbor, and representatives of Total, Eni/NAOC, among others.

It could be recalled that NLNG Train 7 has been delayed for about 12 years. NLNG said the construction period after FID will last approximately four to five years. The project is expected to increase Nigeria’s LNG production by 35 percent to 30 million tonnes per annum (mtpa). A previous deadline for a Train 7 FID in the fourth quarter of 2018 was not met. Nigeria was fifth largest LNG producer in the world last year, with its production declining. It lost its fourth place to the United States in 2018, according to the International Group of Liquefied Natural Gas Importers. This year has seen a surge in financial approvals of LNG production projects, with a total of 62.8 mtpa capacity receiving final approvals. This is jump from 21 mtpa capacity approved last year and just 3.4 mtpa in 2017.