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NLNG @30: Celebrating Nigeria’s Finest Partnership in Oil & Gas

-By Gideon Osaka

When the Nigerian Liquefied Natural Gas Limited, otherwise known as NLNG was incorporated on May 17, 1989, exactly 30 years ago, to harness Nigeria’s vast natural gas resources and produce Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs) for export though many people did not envisage then that the company was a product of visionary plan that sees beyond the oil boom era. Not many Nigerians would believe that the Nigerian Liquefied Natural Gas Limited, situated at Bonny, Rivers State, is truly a Nigerian company.

The disbelief is based on the fact that many Nigerian companies are associated with what is often termed the “Nigerian factor” – nepotism, favouritism, lack of corporate governance, absence of transparency, financial impudence and the like. However, the story is different in the case of NLNG, which has shone like a diamond in the sky. Perhaps the ownership structure of the NLNG may have contributed in no small measure to the stellar performance of a company often associated with international best practices. The NLNG Act is based on initial terms of contract between government and private shareholders of the company. NNPC holds overriding 49 percent financial interest in the company while Shell Gas BV owns 25.6 percent operating interest. Also, Total has 15 percent in the company while Eni International N.V.S.a.r.l holds the remaining 10.4 percent interest. The terms include incentives, concessions, guarantees and assurances in letters to lenders for the NLNG Trains 4 and 5 expansion by Ministry of Finance, Ministry of Justice and Office of the Attorney-General of the Federation, and the Central Bank of Nigeria (CBN).

The main thrust of the guarantees and assurances are to assure protection of foreign investments by the non-breach of the NLNG Act which, in recognition of its sanctity, has been protected by all administrations of the federal government right from inception. The terms of the contract were modelled after similar packages of incentives flaunted by other competing countries such as Qatar, Oman, Malaysia, Angola, and others to attract investors in gas liquefaction and export. Expectedly, the legal framework, commercial incentives and sanctity of contracts built into the NLNG Act formed the springboard for the company’s rapid growth from a single train gas processing company to an efficiently run six train company with one of the healthiest balance sheets among the biggest commercial enterprises in Africa.

Six years after the company was Incorporated, final investment decision, FID, by shareholders for Trains 1 and 2 was taken in November 1995, while commencement of plant construction was witnessed in February 1996. It is worthy of note that NLNG commenced production on September 15, 1999, while export of first cargo took place on October 9, 1999. One FID after the other, 6 trains were built in quick succession, making Nigeria LNG the fastest growing LNG company in the world at the time. There is no gainsaying the fact that NLNG has made the most tremendous financial impact more than any other company in Nigeria. It has remitted cumulative $40.47 billion or N14. 6 trillion revenue to the Nigerian government in the past 19 years. It has also monetized over 6.37 trillion cubic feet of associated gas to Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs), thus helping to reduce gas flaring by upstream companies from over 60 percent to less than 20 percent. From the monetization of gas hitherto being flared, NLNG has generated over $100 billion revenue since inception; paid over $36 billion to shareholders as dividends, and 49 percent of the total dividends goes to the federal government through the Nigerian National Petroleum Corporation (NNPC). Also of the $28 billion paid to Joint Ventures (JVs) feedgas suppliers, some 58.8 percent of that amount goes to the federal government through NNPC. In 2018, NLNG paid government about $864 million in incremental CIT alone.

Other payments declared by the company include employee income tax, state and local government taxes, as well as regulators’ levies and fees totalling over N60 billion. Out of corporate goodwill, NLNG has also voluntarily committed about N222 billion to social responsibility projects in Nigeria, assisting plug gaps and solving needs in areas where government is yet to reach with overstretched hands. The huge social assistance budget places NLNG as clear leaders in Corporate Social Responsibility in Nigeria. The company has spent over N25 billion on community projects over the years; it injected over N2.0 billion in building world-class engineering laboratories in six Nigerian Universities through the University Support Programme; The beneficiaries include University of Port Harcourt, University of Nigeria, Nsukka, University of Ibadan, University of Maiduguri, Ahmadu Bello University and the University of Jos. NLNG is presently spending N120 billion on the construction of Bonny-Bodo Road in Rivers State. The NLNG also signed a memorandum of understating, MoU, with the Bonny Island community to provide N3.0 billion each year for 25 years for the overall development of the Kingdom.

The company, in fourth quarter of last year, awarded contracts for Front End Engineering Design (FEED) of its planned plant expansion project, Train 7, to B7 JV Consortium and SCD JV Consortium, inching closer to realising its expansion goals of increasing liquefied natural gas production output from 22 Million Tonnes Per Annum (MTPA) to 30 MTPA.

It is crystal clear that the NLNG has taken a distinctive path and shown a way worthy of emulation by all Nigerian companies.