NLNG signs engineering design contract for Train 7 construction
In the build-up towards Train 7 Final Investment Decision (FID) later this year, the Nigeria LNG Limited (NLNG) is seeking about N2.52 trillion ($7 billion) from the global financial markets for the sustainability of its operations and expansion project which will increase its production capacity from 22 Million Tonnes Per Annum (MTPA) to 30 MTPA.
At a ceremony in London yesterday (Wednesday) to commemorate the repayment of a $5.45 billion Shareholder loan for its existing trains, Tony Attah, Managing Director/Chief Executive Officer of NLNG, revealed that funds being sought will cover the company’s expansion program (construction of Train 7) and investment in the upstream gas sector in Nigeria that will ensure the sustainability of feedgas supply to its existing trains (Trains 1 to 6) and the new Train 7.
The repaid consolidated loan contributed towards funding the Base Project, Expansion Project, NLNG Plus Project and Train 6. The final repayment is a milestone for NLNG and Nigeria.
“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. Therefore, we will be seeking support from the local and international financial institutions, our shareholders and the Nigerian government,” Attah said.
Also yesterday in London, the Nigeria LNG Limited (NLNG) awarded the contracts for Front End Engineering Design (FEED) of its planned plant expansion project, Train 7, to B7 JV Consortium and SCD JV Consortium.
Train 7 will cost as much as $6.5 billion to build, with another $5 billion to be spent on upstream gas supply, Attah said.
A completed FEED process will pave way for Engineering, Procurement and Construction (EPC) pricing and bidding processes which are preconditions for Final Investment Decision (FID).
The consortia, B7 JV Consortium comprising American company KBR Inc., Technip of France and Japan Gas Corporation (JGC); and SCD JV Consortium, made up of Saipem of Italy, Japan’s Chiyoda and Daewoo of South Korea, will participate in the Dual FEED Process and produce a Basic Design Engineering Package (BDEP) that will determine their EPC pricing, and eventually their bids to construct the train.
On the Dual FEED strategy, Attah said “the Front End Engineering Design 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.”
“Typically, FEED takes about 9-12 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 give 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,” he added.
According to Royal Dutch Shell, by 2030, the world’s demand for LNG could hit 500 million tonnes per year from current demand of around 300 mtpa hence Nigeria, which holds the world’s 9th largest amount of natural gas could see its market share dwindle without new investments.
A forecast by the International Energy Association sees Australia, Qatar and the United States supplying 60 per cent of the world’s LNG by 2023 and increasingly doing battle for a bigger share of the key market of Asia.
In Africa, the competition is heating up too; significant gas finds in excess of 127 trillion cubic feet in Mozambique have created the potential for another African super player.
Mozambique is expected to become the second-largest exporter of liquefied natural gas by 2025, as the country steps up production from 10 million tonnes per annum in 2017 to an envisaged 50 Mtpa.
Egypt which could become self-sufficient in natural gas by the end of this year with the start of Eni SpA’s giant Zohr field has vast facilities to turn gas into LNG, which can be exported by ship.
Nigeria, which supplied the world with 7 percent of the super-chilled fuel last year, cannot afford to miss out on the fight for market share in Asia, analysts say. It is also keen to retain markets in 24 countries it supplied LNG in 2017, a prospects that increasingly looks bleak with difficulties it has had re-marketing its expiring contracts.
However the NLNG’s future shapes out has grave implications for the country. Through the NLNG Nigeria has received $15billion in dividends. In the past 6 years, the company has paid over $5billion in taxes and employed 2,000 Nigerians directly and another 18,000 through vendors and contractors.
Big Read |